Natixis to exit worst-of autocalls

Natixis has announced it is repositioning its equity derivatives under a lower risk appetite. The step comes as it moves away from the most complex products and tightens exposure limits on low- and medium-risk products.

“We are exiting from the riskiest products such as autocall worst-of stocks long-term,” a spokesperson for Natixis, told SRP. “Most other products are maintained although restrictions will be imposed on some of them by volume or client type.”

We continue to propose all global equity formats, including US, European, UK and Apac indices, to our strategic clients

The products will essentially be offered to Groupe BPCE retail networks and Natixis’ selected strategic clients. This means a reduction in the number of clients served from more than 400 to approximately 50. Equity net revenues are expected to reach a new run-rate of approximately €300m per annum, with an associated reduction in the cost base.

The bank is exiting from the US, mainly because the market is not adapted to the type of solutions it offers, and is also closing its UK equity derivatives desk. The team serving the European time zone will be centralised in Paris. 

“We continue to propose all global equity formats, including US, European, UK and Apac indices, to our strategic clients," the spokesperson said. "Our strategic clients for equity structured products are primarily based in Europe and Asia.”

Natixis launched 103 structured products across five jurisdictions in the third quarter of 2020 according to SRP data.

In France, the bank issued 33 structures, worth an estimated €580m, almost level on the prior year quarter (Q3 2019: €575m from 33 products). The products were distributed via 14 different channels, including Equitim, Swiss Life Bank Privée, i-Kapital, and its Agapan Solutions team, which offers tailored solutions for independent financial advisers.

The bank’s most successful product in the French market in the quarter was Alizé 3, an eight-year autocall linked to the Cac Large 60 Ewer Index that was distributed via the network of Caisse d'Epargne and sold €181m during its subscription period.

In Sweden, the bank was the manufacturer behind two products from Strukturinvest that sold a combined SEK36m (US$4m). Single products were issued in the UK, where it sold £598,296 with FTSE 150 Kick Out Plan that was available via Mariana, and in Italy (Outperformance Certificate Air France-KLM and Ryanair).

Outside of Europe, Natixis sold 66 products with estimated sales of US$225m to private investors in Taiwan.

Natixis posted net revenues of €1.8 billion in Q3 2020 (restated), down 16% from the same quarter last year.

According to the bank, the underlying net revenue evolution highlights its ‘resilient business model’, recovering from the impacts of the late Q1 2020 market dislocation (mainly in asset management), Q2 2020 lockdown measures (mainly in payments) as well as H1 2020 dividend cancellations and uncertainty regarding the shape of the economic recovery (mainly in corporate and investment banking - CIB).

Asset management assets under management (AuMs) were up three percent quarter-on-quarter to reach €910 billion as at end-September 2020. Q3 2020 AuMs were impacted by a €24 billion positive market effect and a negative €20 billion FX effect.

Net inflows in asset management reached approximately €2 billion, with continued ‘good momentum’ for North American affiliates essentially across fixed income and growth equity strategies.

Natixis Investment Management captured growth coming from ESG (approximately €2 billion net inflows across open-end funds with French SRI label in Q3 2020) as well as from Asian clients (more than €5 billion net inflows YTD).

‘The results of our corporate & investment banking business will become steadier through the adjustment of our equity derivatives positioning,’ said Nicolas Namias (pictured), Natixis chief executive officer.

Click the link to read the full third quarter 2020 results.