The US bank has halted the issuance of structured products on its own paper in the US market during 2021.

Wells Fargo has stopped new issuance of structured products in the US market with SRP data recording no activity throughout 2021 after two years of diminishing issuance and sales. The bank issued 151 products in 2020 worth US$686m compared to 323 structures in 2019 worth US$ US$1.5 billion.

The US bank however remains an active distributor of structured products in the retail market and has boosted its distribution of US structured products tied to index-baskets in the second quarter of 2021 with an increase in sales to US$157m compared with US$46m in the same period a year prior.

Wells Fargo has kept a steady flow of products and sales through its retail distribution channel YTD with more than 180 products marketed worth US$638m, which is aligned with the overall distribution figures of the last two years (2020: 386 products/US$1.13 billion/ 2019: 357 products/US$1.12 billion).

SRP data shows that during Q2 21, index-baskets overtook single index equities as the most popular asset class from the second quarter of 2020. In this period, single index assets accrued US$152m in sales, though this figure dropped to US$80m in the same period the following year.

Distribution sales pertaining to the exchange-traded fund (ETF) asset class have more than doubled since Q2 20, standing at US$67m from US$32m. This aligns with Wells Fargo’s uptick in distribution of products tied to ARK Innovaton ETFs in Q2 21 where sales total US$19m.

Wells Fargo distributed a total of 86 structured products in the US market during Q2 21 valued at US$307m, a 34% jump from its figure of US$230m in Q2 20 which accounted for 85 products.

Throughout the year, sales raised by the retail distribution channel have steadily increased reaching US$250m (64 products) by the end of the final quarter of 2020 and climbed to US$300m (86 products) in the first quarter of 2021, showing product stagnation.

Business lines

The bank led by Charlie Scharf (pictured) achieved a net income of US$6 billion during the second quarter of 2021, compared with US$4.6 billion in the previous quarter and a loss of US$3.8 billion in Q2 20.

Total revenues stand at US$20 billion, reflecting an 11% increase from the previous year’s figure US$18.2 billion.

Net interest income decreased by 11% to US$8.8 billion, primarily due to the impact of lower interest rates and lower loan balances reflecting soft demand and elevated prepayments, as well as higher mortgage-backed securities premium amortisation.

Provision for credit losses decreased by US$10.8 billion as second quarter 2021 included a US$1.6 billion fall in the allowance for credit losses due to continued improvements in the economic environment.

Click to view the bank’s second quarter earnings release.