We are definitely back on track, Leonteq

Leonteq is one of the most prolific providers of structured products in Europe. The Swiss company has sold 811 structured products worth an estimated €1.7bn in 2017 through its Leonteq Securities issuance vehicle (formerly EFG Financial Products), predominately to retail investors in its domestic market, Switzerland, but also to investors in Germany, France and Italy and private investors in the Netherlands and Ireland, making it the second most active provider (behind Vontobel) this year, according to SRP data.

In part one of an interview, Marco Amato (pictured), chief financial & risk officer at Leonteq, spoke to SRP about the company's reorganisation, performance in 2017, partnerships and plans for the year.

"Leonteq is a 10-year old firm and people tend to forget how many positive things have happened over that period," said Amato. "Founded in 2007, we are one of the largest structured products players in Switzerland and have built a meaningful franchise across Europe and Asia."

In 2016, Leonteq faced various issues and delays with platform partners while costs increased substantially, driven up by staff growth and strategic initiatives, according to Amato. "We underestimated the onboarding and ramp-up phase with new partners and were not transparent enough about the cost development in the second half," said Amato. "We have implemented the largest job reduction programme in the history of Leonteq, reallocated our resources and set priorities for dedicated focus groups.

"As shown by our half-year results we're making a profit again, which is testimony to the work we have done to address the majority of identified issues," said Amato. "This provides us with a good starting point to rebuild our position in the market and regain the trust and confidence of our partners, shareholders and clients."

The net fee income generated in relation to the issuance of structured products in the first half of this year is impressive. "We are confident that we will continue to grow our market share and further establish Leonteq as a renowned structured investment products player in those markets were we want to be active," he said. "To give you an idea of our issuing activity in the structured products market, in 2013, we launched over 10,000 products, whereas, in the first half of 2017, we issued almost 13,000 through our platform."

After reassessing its strategy, Leonteq decided to concentrae on the main markets, such as France, Italy and Germany in Europe, according to Amato. "In Asia Pacific, which is our fastest growing market, we continue pushing forward our presence in Hong Kong and Singapore and establish ourselves as a new player in Japan to increase our market share," he said.

"We are still far from where we want to be, but we're definitely back on track," said Amato. And he is confident the market will provide opportunities "so long as we continue to focus on cost management and growing our partnerships as the basis for steady growth, especially in Asia".

In February, Leonteq Securities and Credit Agricole entered a cooperation agreement in the area of structured investment products, with the French bank using Leonteq's technology to customise and distribute structured products to its network. "The partnership with Credit Agricole is an indication of where we want to go and the kind of player we want to be in this market," said Amato. "We have only agreed to work together, but, as with any such big institution, we want to develop the relationship further and increase the pool of partners as well.

"As we experienced in 2016, being dependent only on a few partners can have a big impact," said Amato. "We have a number of partnerships in the pipeline and we want to continue investing in our existing partners. The focus is also in finding a partner in Asia as we want to send a clear message about our commitment in the region. Furthermore, we plan to expand our cooperation with new insurance providers."

For the remainder of the year, Leonteq's will continue with ts cost saving initiative, according to Amato. "We want to finish the year with savings of over CHF15m (€13.1m)," said Amato. "On the revenue side, there is strong client demand, as we have seen in the first half of 2017, and we are positive that our fee-based revenues will grow."

Efficiency is another aspect, according to Amato. "We want to capitalise on our high level of automation and streamlined processes to address the high amount of small tickets we have which are less profitable but still require significant resources," he said. "We will have a stronger focus on profitability as opposed to just generating turnover."

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