Belgian bank teams up with Natixis to debut NOK and climate index

Nagelmackers has hattrick of 'firsts' with latest offering. The bank partnered with Natixis for the first time, launched its first foreign currency denominated note, and debuted a Euronext climate index in Belgium.

Nagelmackers has collaborated with Natixis for the launch of two 100% capital protected structured notes - one autocallable and one switchable - linked to the Euronext Climate Orientation Priority 50 Equal Weight Excess Return (Ewer) index.

It's the first time the Belgian bank has partnered with an issuer other than Societe Generale or Codeis Securities (the special purpose vehicle of Societe Generale) for its structured notes, according to Gianni Pauwels (pictured), product manager off balance, Nagelmackers. "Starting this year, we have decided to work with an open architecture, also because of Mifid 2, and we have opened up to work with other parties to be able to offer our customers the best possible products," said Pauwels.

Nagelmackers is often contacted spontaneously by manufacturers to see if the bank is interested in the structures they have on offer, according to Pauwels. "What follows is that we make a number of proposals to each interested party, and after an evaluation we pick the best one."

The autocallable note, which has a term of five-years (compared to nine-years for the switchable note), is denominated in Norwegian krone, a currency not used before by the bank who, until now, had stuck to distributing products in euros. "If you look at the level of the Norwegian krone, this is reasonably low and we definitely see a possibility for upward potential," said Pauwels.

In January the NOK recorded the strongest increase against the euro, after having reached the highest level since 2008 in December 2017, at 9.99. "In our view, the NOK should therefore in 2018 continue to rise to 9.30 in the medium term, given the improvement in the Norwegian economy and the tighter monetary policy," Pauwels said.

"Although the interest rate has risen a little bit today, with foreign currencies we can offer shorter maturities to the client, which I do think is an advantage. With products denominated in euros you have to think about a maturity of nine to 10 years. I think customers are prepared to take the exchange rate risk in exchange for a shorter investment term," said Pauwels. "In this way we can also offer diversification to our customers who are now able to invest in a foreign currency combined with a structured product."

The Euronext Climate Orientation Priority 50, another 'first' for the Belgian market, is an excess return index with synthetic dividend, which takes its investment universe from the 200 companies in the Euronext Climate Europe Index. "The stocks in the index are selected based on the efforts a company makes to reduce CO2 emissions, an SRI theme," said Pauwels. "This in combination with Scandinavia, because when people think about Norway they also often think about 'green' production."

The majority of Nagelmackers structured notes are linked to proprietary or 'house indices', although the bank has launched products on the Eurostoxx 50 in the past. "I think that in today's climate not many parties are able to offer plain vanilla products on [the Eurostoxx 50]," said Pauwels. "The Euronext Climate Orientation Priority 50 is nice to play on the sustainability theme also with regards to the story to the customer."

There are 30 structured products denominated in Norwegian krone listed on the SRP Belgium database, dating back to November 2011. The 56 structures which have strike dates in Belgium in 2018 include 46 euro products, seven US dollar products and one product each denominated in Norwegian krone, New Zealand dollar and Swedish krona.

Click the link to view the index rule book.

Belgian insurer expands ESG offering with Solactive climate care index

Client demand is shifting towards protection combined with asset allocation techniques, KBC

Belgian bank offers two horse bet via SG positive impact finance