In a bid to offer higher returns to risk-averse investors, the Japanese branch of Citibank, N.A. said Wednesday it plans to launch a new yen-based time deposit linked to the benchmark Nikkei average.

By guaranteeing the principal on the deposit and offering a maximum annual interest rate of 10 percent, Citibank hopes to attract accounts in a nation that has cultivated a distrust toward the stock market that rock-bottom interest rates have failed to soothe.

The six-month time deposit will be launched on Sept. 3.

Customers who predict correctly whether the Nikkei average will be up or down at the end of the six-month period can earn a maximum 10 percent interest return on their deposits, calculated on an annual basis.

Those who predict incorrectly will earn no interest.

Interest earned will be in proportion to the changes registered on the Nikkei. At the launch, depositors will gain the maximum interest return if the Nikkei average moves 30 percent or more.

"Japanese consumers are extremely frustrated about making their accounts grow in a super-low interest rate environment that has lasted several years," said Masayoshi Kimura, vice president of Citibank's global consumer banking section. "At the same time, they are hesitant to invest in stocks when they cannot see how much further the market will fall."

Japan holds the world's highest savings rate despite the fact that interest rates on six-month time deposits are around 0.01 percent.

This has more to do with a lack of other viable options, not choice, he said. "Unemployment is at a record high and people are uncertain about the future. They are increasingly wary of financial products with no guarantee."

The product requires a minimum deposit of 1 million yen and a separate application fee of 2 percent. For a depositor to earn back his or her application fee on a 3 million yen deposit made when the Nikkei average stands at 11,000, the Nikkei must rise to 12,650 or fall to 9,350 at the end of six months.