It’s been a busy week on the bank strategy front, as Vontobel and Nomura announce key initiatives.

On the hiring side, UK managed services firm Delta Capita has appointed James Baker as chief business development officer for structured retail products at its London office. He will report to Mark Aldous, managing director of structured retail products at Delta Capita. Baker previously worked at Barclays, most recently as the global head of platforms and issuance development.

Many asset owners suddenly have a request that indices should reflect the liability side - Christian Kronseder, Allindex

Swiss bank Vontobel, which has made several strategic hires in the past year, has rejigged its platforms and services unit for financial intermediaries, bringing together its advisory capabilities for financial intermediaries and ultra-high-net-worth individuals (UHNWI) within wealth management. The move is aimed at aligning the needs of UHNWI private clients ‘to a significant extent with the institutional investment needs’ of financial intermediaries and family offices. Going forward the platforms and services teams that manage the platforms for financial intermediaries and Vontobel’s transaction banking solutions will be led by Markus Pfister, head of structured solutions & treasury, and Felix Lenhard, head of technology & services.

Staying within the wealth management sphere, Nomura’s newly launched International Wealth Management (IWM) division has hired 25 private bankers and investment advisors during the past half year, as it plans to increase current assets under management threefold in the medium term. The appointments in Singapore and Hong Kong SAR follows IWM's recruitment of over 20 bankers in January. The private banking business is headed by Ravi Raju, who was named head of IWM in September 2020.

On the index front, Allindex, a Swiss fintech that provides technology and services to the asset management industry, has developed a mobile application were investors can use their phone to invest in customised indices. Chief executive officer Christian Kronseder told SRP that most of the innovation within the index space comes from the asset management and the asset owner community.

“Many asset owners suddenly have a request that indices should reflect the liability side more than regular equity indices do,” he said. “There is also a discussion on whether the current regime of market cap weighted indices makes still sense.”

The final few bank results have come trickling through. For HSBC, revenue dropped four percent to US$12.6 billion mainly due to ‘lower revenue in markets and securities services (MSS) and the impact of lower interest rates’. At the end of June, it had derivative assets of US$209.5 billion and derivative liabilities of US$200.2 billion, down 31.9% and 33.9% from six months ago, respectively.

From January to June, the UK bank marketed 22,917 structured products worldwide, SRP data shows. Other than the 17,803 flow notes in Germany, Hong Kong SAR has become the largest retail hub featuring equity-linked investments, structured warrants and callable bull/bear certificates.

For BNP Paribas, structured products performed well in Q2 2020, especially in Japan where sales volumes increased almost tenfold, according to SRP data. It has reported a very strong growth in derivatives activity, particularly in structured products, in the second quarter of 2021. BNP Paribas issued 334 public offers across 16 different jurisdictions in Q2 2021, according to SRP data (Q2 2020: 419 public offers).

It was particularly active in its home market France, where it raised an estimated US$1.2 billion from 172 products (Q2 2020: US$875m from 179 products). More than 92% of its French offering, which was solely linked to equity underlyings, featured the knockout payoff.

In an analysis written for SRP, FVC managing director Tim Mortimer notes call overwriting strategies have always occupied an interesting niche position straddling the worlds of structured products and funds with the concept originating from equity fund managers decades ago. The basic idea is to have a primary position invested in a group of stocks or tracking an index, and on top of this a series of call options are written, either on individual stocks or the entire index or basket. This strategy is also known as selling covered calls or buy-write. Fund managers like this approach because the options can be sold flexibly according to market view, timing, fund performance and attitude to risk. In practice if the call options sold do not exactly mirror the holdings then the mismatch risk is still very small.

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