Kempen has won Best Distributor as well as Best Peformance in the Netherlands for this year's SRP Europe awards.
SRP considered 10 structured products with combined sales of more than €70m from the bank - with strike dates between October 1 2017 and September 30 2018 - and six products, which on average returned 8% per annum, maturing during the same period.
Despite winning both awards, 2018 was a somewhat mediocre year for the Dutch bank in terms of volume sold due to the lack of reinvestments, said Laurent Guntenaar (pictured), director, structured investments distribution, Kempen. “A lot of autocallables where not early redeemed and therefore we missed the reinvestment opportunities,” he said. “We were quite happy with the continuous interest in our product offering as investors choose autocallables as alternative for cash equity or even partially capital guaranteed products for the more defensive investors. We have had a pretty good year in the field of public offers.”
Marcel Pronk, structured investment sales, Kempen (pictured below), added that in the second half of the year, there was increased demand for products with full or partial capital protection. “Due to an increase in capital market rates and continuous low volatility these type of products became more attractive,” said Pronk.
Other highlights were a number of digital coupon notes with a memory coupon which sold in very decent volumes in the Belgian market, according to Guntenaar. “These products are used as surrogate to bonds as they potentially offer a higher coupon then the traditional bonds,” he said.
The majority of Kempen’s products are issued on the paper of parent company Van Lanschot, however, the Dutch bank also collaborated with BNP Paribas and UBS while the CMS note was issued via Société Générale, the French bank’s first public offer with Kempen in the Netherlands.
“As product manufacturer we differentiate ourselves by offering multiple issuers to our clients,” Pronk said. “Obviously we work a lot with Van Lanschot as issuer, but we offer our clients also the possibility to combine the trading capabilities of Kempen with several other third party issuers to diversify credit risk. This one-stop-shop approach is quite unique in our home market.”
Another differentiating factor, according to Guntenaar, is the bank’s niche approach. “We don’t want to offer all kind of products to all kind of clients but try to be as good as we can in the choices we make,” Guntenaar said, adding that Kempen is striving to have the best possible service level in both pre- and post-trade. “Finally the fact that we are a private bank differentiates us as issuer of structured products in comparison with the traditional investment banks who are active in this space,” he said.
According to Guntenaar, 2019 will be interesting from many perspectives, mainly driven by macroeconomic events, and, although it is probably too early to tell, it will be a continuation of 2018 in terms of product demand.
“We still see a strong demand for more defensive autocallables with coupon barriers at 80%, or lower, and redemption barriers at 70%, or even lower,” he added.
Pronk admitted that due to the combination of low interest rates, low volatility and high dividends traditional memory phoenix autocall structures have become quite expensive resulting in relatively low memory coupon levels. “Demand in autocallables might shift to slightly more riskier versions. Step down autocallables could therefore become more popular in the Netherlands this year,” said Pronk.
As for the partially capital guaranteed structures the bank sees an increasing demand for environmental, social and governance or positive impact linked and issued products, according to Guntenaar.
“Sustainable and positive impact investing is a topic that gets more and more attention in our private bank,” said Pronk. “We are planning to launch a product based on this theme for the Dutch market in the coming weeks.”
The SRP Europe Conference 2019 will take place on 5-7 February at the Radisson Blu Portman Hotel, in London.