Skandia has decided to halt the offering of structured products after a review which concluded that as a customer-owned company its strategy will focus on its core business - retirement and financial security.
"Structured products have been a complementary product in Skandia's offering, and future regulations make them costly investments," said Skandia's CEO, Frans Lindelöw, in a statement. "In line with declining demand and a problematic incentive structure, Skandia has in a joint assessment chosen to discontinue this product line".
According to the Swedish savings bank, after a review of its product range, it has decided not to offer structured products anymore. Skandia is in a process of change to focus 'more clearly' on its offer for pension and long-term savings 'in accordance with the company's strategy'.
Customers' existing holdings in structured products are not affected by the change. Purchases of new structured products will no longer be possible after ongoing emissions are closing.
Skandia has been a marginal player in Sweden's retail structured products market, according to SRP data. In 2016, the bank sold SEK514m (€54m) worth of products which represented a 3% market share. Year to date, Skandia has sold SEK495m and holds a 6% market share.
The Swedish bank has eight products open for subscription of which six are growth products, one an income play and one growth and income strategy wrapped as certificates and structured notes. Overall, Skandia has marketed 453 structured products in Sweden's retail market.
A source at the bank said the decision does not only relate to the Skandia labelled products but also to the distribution of structured products from other players on the bank’s open architecture platform, primarily in unit-linked insurance wrappers. Skandia has offered products hedged by a number of investment banks including Barclays, Commerzbank, Morgan Stanley, UBS, Societe Generale, BNP Paribas, ING and SEB.
"This platform has been a significant distribution hub for SRPs in the Swedish market," said the source.
Regardng the bank's seven strong structured products team including by Wiveka Burvall (pictured), head of structured products; Dusko Savic, sales; Roni Gani, structuring; and Erik Svensson, quant/structuring, a Skandia spokesperson said that the decision will bring changes within the team.
"Skandia and union representatives are currently negotiating in accordance with Swedish labor regulations. Whether this means redeployment or not is too early to say," said the spokesperson, adding that customers already invested in structured products marketed by the bank will not be affected.
As reported, sales and issuance of structured products in the Nordics have failed to make a recovery in the first half of 2017 compared to the same period in 2016, according to SRP data. With the exception of Denmark, were volumes increased by 40%, sales in Sweden, Finland and Norway decreased by 36%, 30% and 25%, respectively. Sweden's issuance, with a 27% fall, has been hit the hardest.
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