a substantial taxation risk for the bank. The second version of the product, which did involve securitization, was given the go-ahead. The implementation team consisted of Willie Donald and Neil Forrest, responsible for the product, Ian Dickson and John Lloyd, for sales, John Trouten, for customer care, Dave Smith, for process area, and three people from systems. A second team was dedicated to develop the processes surrounding the shared appreciation mortgage. At the first implementation team meeting, on 25 September 1996, the launch date was set for 4 November 1996. Gary Gordon, Manager, Operations, joined the team in early October 1996. Product and mMarkets The team focused on a choice for borrowers of two interest rates: a 0% mortgage where the borrower could borrow up to 25% of the value of property and give up appreciation worth three times the percentage borrowed, i.e. up to 75%, and a 5.75% mortgage where the borrower could borrow up to 75% of the value of property and give up appreciation at the same percentage as the percentage borrowed. For the investor, the 5.75% SAMs would be securitized into fixed rate bonds with a fixed interest rate of about 55% of the 10-year gilt yield (a gilt is a UK government bond). The 0% SAMs would be securitized into floating rate bonds with a variable interest rate of about 60% of the three month Libor (London Inter-bank Offered Rate, an interest rate average calculated from estimates submitted by the leading banks in London). The interest would be paid quarterly, and would consist of the fixed or floating element plus an additional element from SAMs terminated in that quarter. The debt was amortized (reduced) each quarter as the number of homes with SAMs reduced. Therefore the ratio of the interest to the debt would gradually increase, and the benefit of this would compensate for the bonds not having a fixed term. SAMs would be less risky for investment than equity (a share of ownership), they would be long term, and their earnings would be linked to house prices, which historically performed better than inflation but not as well as shares. Consequently, they were expected to appeal to pension funds, property funds and equity investors. All of the debt and equity of the SAMs would go to the bondholders, with Bank of Scotland receiving a fee. Money from the mortgages coming into Bank of Scotland would