Credit Agricole Corporate & Investment Bank (CACIB) is accelerating the rebuilding of its equity derivatives business through a joint venture between its global markets and equity solutions divisions three years after withdrawing from 'certain activities' and selling its €12.5bn portfolio of equity derivatives notional to BNP Paribas Global Equities and Commodity Derivatives (GECD).
CACIB has beefed up its global markets management team with the appointment of Gene Kim as head of international and head of global markets for the Americas. Based in New York, Kim reports globally to Isabelle Girolami (pictured), head of global markets and locally to Marc-André Poirier, head of the Americas region. Girolami, who joined Credit Agricole from Standard Chartered, has also brought in Sebastien Domanico from Societe Generale as head of debt capital markets, as well as Pierre Gay as head of global markets, Europe, and Arnaud d'Intignano, who is now head of securitisation.
The French bank is 'expanding the scope of products offered to our clients as part of the structured products redeployment in line with [Credit Agricole's] medium-term plan and risk strategy' and the revamped set up will be a 'client business' because it's a 'product that clients want', said Girolami in an article in SRP's sister publication Global Capital.
The revamped business will deploy the bank's pricing and risk management technology, but there is no intention 'to open or white-label' its platform externally, she said. CACIB has been focusing on rebuilding its structured products capabilities over the last couple of years, on the back of its Strategic Equity Transactions business, which has continued offering structured solutions and equity financings via products indexed to certain underlyings, such as rates as well as a bond repack platform and secured funding.
This redeployment is based on four core principles: putting client needs at the heart of the bank's 'product development philosophy'; diversifying across asset classes and technology 'to avoid dependency and excessive leverage'; giving compliance, legal, and operational aspects 'the same importance as trading and risk management capabilities'; and, leveraging on the experience gained through the bank's 'legacy management such as models, market liquidity, accumulation risk, and staff experience'.
CACIB's structured products issuance over the last few years has revolved around credit-linked notes (CLNs), starting with vanilla products but moving to more complex CLNs. As a result, issuance increased by more than 50% between 2011 and 2012, and by a further 10% year-on-year thereafter. The bank's repack platform has also seen good development in 2014 and 2015, with the volume of issuance increasing by more than 70% year-on-year.
Earlier this year, Jean-Yves Hocher, chief executive officer of CACIB said that, following the deep restructuring undertaken in 2011-2012, the investment banking division was 'determined to create synergies' as well as continue with 'cost reductions and external partnerships' As part of the plan for 2016-2019 announced at the beginning of March, CACIB and CACEIS, the bank's global asset servicing provider, were combined within a single division.
In 2011, Credit Agricole announced a plan to withdraw from 'certain activities' including equity derivatives and commodities derivatives following €2.5bn of write-downs related to its corporate and investment banking division. In 2013, the bank agreed the sale of its equity derivatives notional portfolio to BNP Paribas, a transaction which took effect in January 2014, ensuring the continuity of service for investors in these products, including redemptions, secondary market, valuations, reporting and client relationships.
"We will revisit this in four months when we have more to talk about," said a spokesperson for Credit Agricole.
Credit Agricole CIB's head of SP strategy departs, focus on SP redeployment remains
Crédit Agricole reports 21% increase in structured products assets
SocGen settles swap with CA on derivatives venture
CA moves on Newedge/Amundi stakes
BNP Paribas acquires Credit Agricole €12.5bn EQD portfolio