Natixis is planning to increase the headcount of its Japan business by 50% following an increased target revenue for the bank’s operations in Japan for 2017 of $11bn. The bank will focus on wholesale banking and asset management as it moves to develop its international business. SRP spoke to Samuel Plagnard, head of global markets structuring, Asia Pacific, at Natixis in Hong Kong about the firm’s plans in the structured products space and how it plans to make inroads in a challenging market place.

Do you have any specific plans to develop your structured products business in Asia? What opportunities are you looking for right now?
Definitely, we want to further develop our structured products and solutions business in Asia, with sophisticated and bespoke investment products at the heart of this development process. Asia is particularly suited for our aims in becoming a global solution house. In each country you need to comply with local regulations, possess the necessary currency capabilities and have a local level of sophistication – all of which requires a customised approach when delivering products to clients. And our expertise in cross-asset solutions (including hybrids, equity derivatives, structured credit, rates and FX) gives us a holistic approach to our clients’ needs. We see great opportunities in Taiwan, South Korea, SE Asia and Japan. We have started working with principal investors in those countries, and we might be looking at further deepening our third-party distribution business in the medium term.

Are you looking for distribution partners to make inroads in specific markets/jurisdictions?
Yes. Natixis doesn’t have any retail branches or private banking business in Asia so it’s natural for us to partner with local distributors to sell structured products. We have already achieved a small number of these partnerships, the agreements creating real value for both parties and we see it as a long-term commitment. Taiwan, Singapore and Japan are markets where we are seeking partnerships for structured products distribution.

Aside from Japan, are there any other markets on Natixis’s APAC route plan?
Yes, as already stated, these include Taiwan, Korea and other countries in SE Asia. We already possess strong momentum with prop investors with whom we are expanding product offerings. Our clients there benefit from our cross-asset financial engineering skills, proposing a one-stop shopping solution approach for sound bespoke product delivery.

What is your differentiating factor from your competitors in the APAC markets?
Natixis is a relatively new player in the solution business in Asia. And as such, we are still in a new market share-conquering mode. Today, the value proposition for our clients lies in the combination of strong financial engineering capabilities (with some recognised edges in hybrids payoffs and structured credit); a good credit rating backed by the very strong balance sheet of BPCE group (the second-largest commercial banking group in France, ranking eleventh in term of assets among the western banks, part of the G-SIBs list – as established by the Financial Stability Board); and attractive funding levels for Natixis paper.

You may not see that many players in the Asia region combining those three factors and at the same time investors/distributors are looking to diversify their credit exposure. It then becomes natural for them to work with Natixis. We position ourselves very much in the solution business niche market, with fully client-driven customisation and product innovation processes. The Asia platform has invested over the past two years in fully fledged engineering capabilities, bringing our financial engineers as close as possible to our clients.

What are the challenges your firm is facing to increase its footprint in Asia?
We are raising the profile of Natixis thanks to our commitment towards clients – but this is a process that takes time, and one that pays off at the end. To illustrate, after two years’ worth of efforts in some countries like Taiwan or South Korea, Natixis is no longer seen as an outsider by prop investors. In two to three years’ time, we are confident that our franchise in the solution business will be well-recognised in the main Asian markets.

The SRP database shows that there are 11 products year to date featuring Natixis as a derivative counterparty for uridashi products in Japan.