Crelan has launched Credit Agricole CIB (FR) Green Europe ESG Select 90, a four-year, 90% protected European Medium Term Note (EMTN), which offers 100% participation in the rise of the iStoxx Europe ESG Select 30 index, subject to 14 months back-end averaging.
The iStoxx Europe ESG Select 30 is the latest ‘green’ index available to Belgian retail investors, who, in recent years, have been able to choose from a number of sustainable indices, including the Ethical Europe Equity, Finvex Sustainable & Efficient Europe 30 and, since last month, ING’s Sustainable Europe Low Risk Equity index. “As a cooperative bank, Crelan has always been interested in socially responsible investing,” said Filip Gabriels, head of product management (off-balance sheet) at Crelan. “Furthermore, apart from the bank, more and more clients are seeing the value of sustainable investments.”
Crelan was keen to use a sustainable index as underlying for this product because the issuing programme of Credit Agricole is also green, said Gabriels. “This product, because it concerns a green portfolio, it affects sustainability in two ways,” he said. “Firstly, as the underlying index and, secondly, because the monies which are collected are intended to support Credit Agricole’s green portfolio.”
While other distributors in Belgium often use managed funds or the interest rate as underlying for their structures, almost all of Crelan’s products are linked to equities. “We have looked at interest rates, but for now we have abandoned this idea,” Gabriels said. “We have also looked at funds and tested within our network to see if there is a demand for fund-linked products, but they say they would rather have an index as an underlying than a managed fund.”
Currency-linked products are not an option either, said Gabriels. “Our clients are fairly defensive, cautious even, and the products you see at the moment are mainly linked to exotic currencies,” he said. “That’s something we certainly will not do.”
Despite the defensive nature of its clients, Crelan’s green note protects only 90% of the nominal invested, something the bank’s clientele might not appreciate. “It is quite difficult to structure reasonable products with decent conditions which are fully capital-protected,” said Gabriels. “We don’t really want to look at longer terms, also taking into account the low interest rate.” Even with an interest rate rise, there is the risk with longer maturities that the price could move a lot, said Gabriels.
Crelan has 38 structured products in the SRP Belgium data base, worth €676m, including several structures linked to sustainable indices, such as the BNP Paribas Arbitrage Issuance (NL) Callable Ethical Europe 90, which is linked to the Ethical Europe Equity index and was issued via BNP Paribas, and three structures linked to the Finvex Sustainable & Efficient Europe 30, which were issued in collaboration with Societe Generale.
Crelan has also collaborated with Amundi, Credit Agricole and Van Lanschot for its structured products.
Related stories:
Belgian providers embrace US dollar-denominated structures
Sustaining a competitive advantage in ESG investing
Delta Lloyd: Finvex index tells good story, expected impact of speculation tax negligible