Switzerland's Vontobel continues to dominate the structured products market in Europe as it increases its footprint and activity beyond the old continent.
The Swiss bank was once again the most active European issuer during the first half of 2018- with 8,163 products marketed year to date - and topped the sales volume ranking with €8.9bn volume sold during the course of the year, according to SRP data. The Swiss bank dominated European issuance and sales in 2017 with 11,912 products and €11.4bn in sales.
The bank has reported in its half-year results that its financial products division delivered 'another very solid pre-tax profit' of CHF51.9 million (€41.5m) slightly improving the CHF51.5 million recorded during the same period of 2017.
Asset Management was the strongest contributor, 'as it benefited from the growth in fixed income products' and combined wealth management also experienced a 'dynamic net inflow of new money in the first six months of the year', according to the bank. In total, Vontobel generated a net inflow of new money of CHF5.1bn in the first half of 2018. Client assets reached a new record level of CHF253.6bn, compared to CHF246.5bn at the end of 2017.
The Swiss bank has continues to capitalise on new technologies including its multi-issuer platform Deritrade 'to continuously offer clients new services in a digital world - combining user-friendly design with optimal efficiency'. This includes the launch in early June of Mein-zertifikat in Austria offers access to four types of products from Vontobel and HSBC including discount certificates, bonus cap certificates, reverse convertibles and 'protect' reverse convertibles.
Vontobel said that its Investment Scout app that was launched in Switzerland in 2017 to enable private investors to select structured products tailored to their individual preferences and immediately issue them via an iPhone app, will be introduced to the German market in the course of 2018.
In the spring of 2018, Vontobel became the first bank in Switzerland to offer white labelling products - 'allowing institutional clients to make use of Vontobel's product expertise under their own name to create a broader client offering'. In May, Basler Kantonalbank also became the seventh issuer to use Vontobel's Deritrade. Basler Kantonalbank is already among a number of Swiss banks that have given their relationship managers access to Deritrade MIP in order to support their advisory services, and has marketed over 600 structured products in the Swiss market.
The Swiss bank also reported in its 20-18 half-year results that since its debut in Hong Kong - the world's largest market for leverage products, that already ranks as one of the fastest-growing and, at the same time, profitable providers, with more than 500 warrants marketed.
In the second half of 2018, Vontobel Financial Products will also launch its products in the Danish market as part of its regional expansion and is also building a digital platform for wealth management as its seeks to mirror 'the success story' of its financial products business.
'This platform will enable it to create even more customized and interactive processes and to offer new services - all for the benefit of its clients - thus also allowing it to target new groups of clients,' stated the bank.
In the coming months, however, wealth management will focus its attention on the integration of Notenstein La Roche Privatbank. Following the legal completion of the transaction on July 2, 2018, the merger of Bank Vontobel with Notenstein La Roche Privatbank and its migration to Vontobel systems is due to be completed by the end of the third quarter of 2018.
Notenstein Private Bank entered the Swiss structured products market in March 2013, with Raiffeisen Switzerland Cooperative as guarantor and EFG Financial Products Ltd (now Leonteq) as services provider, following the purchase of an equity stake of 20.25% in EFG Financial Products Holding for CHF70.2m (€56.2m). Notenstein's equity stake in Leonteq as of the start of 2015 was 24.77%. There are over 2,800 structured products with Notenstein as distributor on Switzerland's database of which 675 are live products.
The purchase of Notenstein La Roche Privatbank was funded by Vontobel using own equity and through the successful placement of a CHF450 million Additional Tier 1 (AT1) bond.
Year to date, Vontobel's return on equity was 15.1% which 'significantly exceeds its cost of capital and its own target return of over 12%'. Following the acquisition of Notenstein La Roche Privatbank and the subsequent increase in the client base and its basis for growth, the target cost/income ratio has been adjusted from 75% to 70% and the target gross margin has increased from 65 basis points to 68 basis points.
'We want to deepen our existing client relationships and to attract new clients - leveraging our strong brand that reflects our client-centricity. In view of geopolitical risks and global challenges relating to trade policy, as well as the uncertainty prompted by the monetary policies of central banks," stated Zeno Staub, CEO of Vontobel. 'We aim to further increase our already solid profitability in the current financial year compared to 2017.'
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