All eyes on new indices, new geographies and regulators looking at new remits.
J.P. Morgan has deployed a custom index not seen before in the structured products retail market via a new indexed annuity targeted at US retirement investors. The new indexed annuity offers a fixed account and four indices, including two exclusive new indices from J.P. Morgan and AllianceBernstein. The J.P. Morgan Cycle Index, exclusively available within Nationwide Peak 10 Fixed Indexed Annuity ‘seeks to outperform the market, allocating to stocks and bonds, with an equity allocation that rotates between different "smart beta" factors based on the business cycle’.
Leading global banks UBS and Citi are the latest to report quarterly results.
Citi has reported a net income of US$4.6 billion for the fourth quarter 2020, on revenues of US$16.5 billion. This compares with a net income of US$5 billion (a seven percent drop), on revenues of US$18.4 billion for the fourth quarter 2019. Revenues decreased 10% from the prior-year period, primarily reflecting lower revenues in Global Consumer Banking, Institutional Clients Group, and Corporate / Other.
We are focusing on markets and jurisdictions where we are relevant and leverage our branding - Gael Riboulet, CACIB
Swiss investment bank UBS has increased its structured product distribution in the US market by about 27% in Q4 20 from the prior year’s 1,547 products worth US$3.8 billion. However, the bank’s structured product distribution did fall from the first quarter of 2020 with 1,181 products valued at US$4.6 billion, making it the most prolific distributor at the beginning of the year. UBS then slid to second place behind Morgan Stanley during the second quarter with 977 products worth US$2.6 billion and has not budged from its ranking since then.
In an interview with SRP, Crédit Agricole Corporate & Investment Banking (CACIB) has strengthened its global markets structuring & product development over the last 18 months. “We are focusing on markets and jurisdictions where we are relevant and leverage our branding such as our domestic markets (France, Benelux and Italy) where the group has retail activities we can capitalise on,” says Gael Riboulet. “We also want to grow our market share in the UK, Switzerland and the Nordics where we believe [Crédit Agricole CIB] can bring added value and relevant expertise to our clients.”
Beyond Europe, CACIB also has plans to rollout these activities in some Apac markets such as Japan where it has a strong footprint and are among the top foreign banks covering the public space.
“Despite markets volumes going down by around 30% we have more than doubled our market share, and continued to serve existing and new clients,” says Riboulet. “ESG has been key for us in 2020, we issued a number of successful ESG structured products.”
The Russian regulator is targeting financial intermediaries in a move to restrict the sale of derivatives and structured products to non-qualified investors. The Bank of Russia has released new recommendations aimed at securities houses and banks acting as their agents urging them to refrain, until the launch of mandatory testing, from the sale of ‘compound and high-risk financial instruments’ to non-qualified retail investors that don’t have the appropriate experience to invest in such instruments.
In people moves news, Benjamin Cyrot, head of family office & financing solutions sales at Natixis, has parted ways with the French bank after six years of service. Prior to joining Natixis, Cyrot was head of sales equity structured products for France at Nomura International in London, before joining Lombard Odier Investment Managers. In addition, Nichole Tan, a vice president, global markets marketer (fixed income & equity) at Natixis has also left the bank.
Citi has appointed Christian Keller as the head of markets and securities services (MSS) for Germany and Austria. Keller will be responsible for leading and implementing a fully integrated MSS business and governance strategy for Germany and Austria. He will be responsible for leveraging the bank’s MSS products across client segments.