Nagelmackers has launched two new structured notes in Belgium. The bank, which was founded in 1747, and, until today, is still the oldest Belgian bank, introduced the 75% capital protected Eurostoxx Dynamic and the 100% protected Ecofi SRI Note, which have a term of six and eight-years, respectively. Both medium-term notes (MTNs) are issued via Codeis Securities while Societe Generale acts as the derivatives counterparty.
In the Belgian market, where investors are often seen as extremely cautious, the low interest rate environment has forced distributors to look at riskier products and longer maturities, according to Gianni Pauwels (pictured), product specialist life & structured products, Nagelmackers. "Although investors in the Eurostoxx Dynamic could lose up to 25% of the nominal invested, I think our clients are prepared to take that little bit more risk in exchange for the higher potential return due to the high 200% participation in the performance of the index."
However, the bank makes sure it has a varied offer, according to Pauwels. "If we issue a product where the customer risks to lose part of the capital invested, we ensure that we also launch a product with 100% capital protection, in this case the Ecofi SRI Note," he said. "What's more, we always advise the customer in accordance with the client's investor profile according to Mifid (Markets in Financial Instruments Directive)."
Nagelmackers has simultaneously launched capital-at-risk and capital protected products before. In October 2014, under its then name Delta Lloyd Bank, the bank launched Finvex Smooth and Finvex Dynamic which were both linked to the Finvex Sustainable & Efficient Europe 30 index while in February 2016 Nagelmackers came with two products linked to the Solactive Atlantic Quality index. "We managed to achieve excellent sales volumes for those products," said Pauwels.
Environmental, social and governance (ESG) and socially responsible investing (SRI) are themes that have become increasingly popular in the Belgian market, according to Pauwels. "Some of our clients only wants to invest in these themes," he said. "The two Finvex products have already achieved a good performance. The Ecofi SRI index, which is also a Finvex index, is more focused on ESG."
Nagelmackers has strong ties with Societe Generale and the majority of its products are issued via Codeis Securities, the French bank's special purpose vehicle (SPV). "At the moment we are working with Societe Generale but we continuously evaluate this. We want what is best for our clients. It could well be that in the future we will start working with other parties but for the moment we are very happy with the collaboration between us and Societe Generale," said Pauwels.
Last year Nagelmackers distributed four structured products with a combined sales volume of €18m to the Belgian retail investor. This year to date the bank has already launched three products (including the two products currently in subscription) of which the first, Market Leaders Auto Switch To Bond, a nine-year medium-term note linked to the Solactive Market Leaders 25 AR, collected €2.6m during the subscription period.
"Nagelmackers wants to grow as a bank in any area, so also when it comes to our structured products," said Pauwels noting that there are four periods for product launches. "In the past we often launched one product per period, but this time we have launched two and I think we will continue to do this for the rest of the year to be able to offer a slightly more varied range of products to our clients."
The SRP Belgium database lists 35 'live' structured products from Nagelmackers, dating back to July 2007. The products, which sold €600m at inception and include 27 structures launched under the Delta Lloyd Bank brand, are linked to equities (27); a hybrid basket (six); and managed funds (two).
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