Bank Investment Contract

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Bank Investment Contract (BIC)

Interest guaranteed by the bank in a portfolio over a specific time frame with a specific yield.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Bank Investment Contract

A bank-issued contract guaranteeing a specific portfolio a specific yield for a certain period of time. This contract usually has a maturity ranging from one to ten years. It is a low-risk, low-yield investment made mostly by corporations carrying 401(k) or profit-sharing plans. See also: Guaranteed Investment Contract.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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([dagger]) Includes guaranteed investment contracts (GlCs), pooled GlCs, separate account GlCs, synthetic GlCs, traditional bank investment contracts and short-term investment funds (Although GlCs have come under fire in the past year, Buck's Richard Koski said he did not expect this to have an appreciable impact on the percentage of 401 (k) plan sponsors that will offer GlCs as an investment option "Sponsors want to have a fixed-income type of vehicle under their plans and these are still the most common of this type The problem cases are still few and far between; sponsors will be more selective in picking their providers.")
Sponsors offer more 401(k) investment choices
Previously, bank investment contracts (BICS) and similar instruments were eligible for the normal "passthrough" coverage rules.
FDIC limits change for retirement plans
Another whole set of issues is raised by BICS, or bank investment contracts. You have to be very, very careful about the guarantees in these contracts.
Do GICs and annuities work today?
GICs and bank investment contracts (BICs) are especially popular with defined contribution (DC) plan sponsors and participants.
GICs: market value or book value, which is fair?

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