Product Snapshot: Swedbank’s final ladder runs out of steam

One of Sweden's top providers, Swedbank, recently closed the subscription of this year's first, only and what looks like could be the bank's final ladder structure with its Bevis Nu Sverige Alpinist. The product raised a mere total of SEK6.5m (€628,000), less than half of this year's average (SEK14.2m).

"We had expected a larger interest in this type of product," said Swedbank's head of investment products, Ann Marie Karlsson (pictured). "We have therefore not yet planned more of this product."

The Swedish market has seen a total of 75 ladders with most sightings occurring in 2012 (17 products) however the structure has been fading and the last couple of years SRP has recorded only one or two per year. Structures featuring ladder payoff profiles have sold over SEK2bn with an average €27.3m per ticket. Swedbank has been the most active provider of Ladder structures with 19 products marketed, followed by Strukturinvest (15), and SEB (14). The OMX Stockholm 30 index is the most utilised underlying (35 products) followed by a basket of Swedish shares comprising AstraZeneca, Atlas Copco, Ericsson, Hennes & Mauritz, SEB, and the Eurostoxx50 index (eight products).

Over the last five years Swedbank has offered four similar ladder structures raising a total of SEK44.7m and it has been over a year since the bank last offered a similar ladder structure, Aktiebevis Alpinist Sverige, raising SEK7.5m.

This structure which automatically locks in the profits for clients on a semi-annual basis is a "good alternative to a long only investment in Swedish equities", according to Karlsson. "We can't say it is a better or worse product than an autocallable ex ante," she said. "It simply depends on how the market is developing going forward."

The Swedish market has been on a steady decline in recent years and by H1 2018 the sales and issuance are down 51% compared to same period in 2017. So far this year Swedbank has issued 73 products worth SEK1.2bn. The bank has a market share of 28% (up from 19% in 2017) and takes second place after market leader Garantum with a 36% market share (SEK1.5bn).

"I can only comment on our own market and sales," Karlsson said, adding that there is still a lot of interest in several of the bank's products. "Sales and volumes so far this year are in line with last year's sales. We are seeing an increased interest in our Bevis and coupon structures. Our new pricing model has been highly appreciated by both advisors and customers."

Bevis Nu Sverige Alpinist is a five-year growth product linked to the performance of OMXS30. The performance is observed annually and any performance of 5%, 10%, 15% and 20% is locked in. At maturity, if the index is at or above 70%, the product offers a capital return of 100% plus the higher of the highest lock in level and 100% of the rise in the index. Otherwise the products offers a capital return of 100% eroded 1:1 by the fall.

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