Glossary

Spain

Annual gross sales and assets invested in retail structured products in Spain (€bn)

The retail structured product market is well established in Spain with all of the main financial services companies offering regular product launches. Through extensive marketing campaigns, including on local radio and national television, structured products have become a part of the mainstream investment scene.

In 2008, due to the ongoing credit crisis, structured products were in direct competition with high fixed rate savings products as local savings banks looked for increased funding from the retail market. According to figures from the Bank of Spain, over €78bn had been placed in deposits in 2008, the largest volume of any year since records began in 1997.

The Spanish market is now the fifth largest market in Europe in terms of outstanding invested down from third as a result of a decrease of 14% on the previous year to €82.2bn as at the end of 2009. Italy and Germany and now Belgium and France are larger by this measure. However it managed to remain the third largest market in annual sales terms with €17.6bn invested in 2009 despite a fall of 40% on the €29.3bn invested in 2008. The two markets ahead of it remain Germany and Italy.

Switzerland

Annual gross sales and assets invested in retail structured products in Switzerland (€bn)

Although Switzerland is clearly dominated by private banking, there is a thriving retail market for structured products with many of these products also being bought by high net worth individuals. As in Germany and Austria, the majority of products are listed certificates and notes and in fact, many of the products issued in Germany are also offered in Switzerland too.

The Swiss structured retail product market has been growing rapidly in recent years, peaking in sales terms in 2007. However as with many other European markets, sales began to decline towards the end of 2008 as investors retreated following the financial crisis, and in particular the Lehman’s default and this continued into 2009.

At the end of 2009, Switzerland was the seventh largest European market in terms of outstanding invested in retail structured products with a total of CHF54.4bn (€36.6bn) invested, a decrease of 19% from 2008. In terms of annual gross sales the market ranked fifth despite sales falling by 40.5% to CHF21.9bn (€14.8bn) compared to CHF36.8bn (€24.8bn) in 2008.

UK

Structured products have been available to retail investors in the UK since the early 1990s. Over the years the market grew but remained much smaller than comparable-sized European markets such as France, Italy or Spain. The failure of the market to become more widely established was primarily a result of cultural factors, in particular the much wider acceptance of equity risk by retail investors and their advisers, which has led to a more well established mutual fund market and direct equity investment.

As at the end of 2009, the outstanding invested across all types of retail structured products increased by 22.0% to £43.12bn (€47.96bn) placing the country sixth in Europe on this measure, an improvement on its seventh position in 2008. It is worth noting that the outstanding invested in tranche products increased by 22.3% whilst that invested in continuous products increased by 18.5%.

In 2009, annual gross sales increased by 71% to £13.8bn (€15.4bn) compared to £8.1bn (€9.0bn) the previous year, placing the market fourth in Europe up from eighth in 2008. This increase was due to both a rise in tranche product sales and increasing assets under management and healthy investment in open-ended structured products.

Sales of tranche products, which form the majority of products sold in the UK, actually grew by 47.3% to £13.24bn from £8.99bn in 2008 surpassing anyone’s expectations at the start of the year. The tranche market is now approximately double the size it was in 2007.