Sales and issuance of structured products in the Nordic region have been on a downward spiral for a number of years now and this trend continued in the first quarter of 2018. In Sweden volumes were down by 45% compared to the same period last year, while Finland and Denmark reported a 35% and 86% drop in sales, respectively. Issuance decreased too, with 40% less products seen in Sweden during the quarter and Finland (-30%), Denmark (-75%) and Norway (-14%) also lacking in new products. The fact that Nordea, which last year had a presence in all four markets, limited its issuance to just two products in Finland did not help while the introduction of Mifid 2 also left its mark.

SRP reviews the data and the financial results of the top five structured products manufacturers in the Nordics.

Swedbank was the main provider of structured products in Sweden during the first quarter of 2018 with a share of 21% of the market, according to SRP data. The bank sold 25 products worth SEK379m (€379m) between January 1 and March 31, down from 32 products with a volume of SEK611m during the same period last year. The bank's best-selling product during the quarter was Bevis Nu Sverige WinWin, a 2.5-year medium-term note (MTN) linked to the OMX Stockholm 30 which sold SEK47.6m during its subscription period.

Swedbank reported debt securities in issue included structured retail bonds worth SEK13.6bn as of the end of the first quarter (December 31, 2017: SEK14.8bn). Outstanding short-term funding, commercial paper and certificates of deposit included in debt securities in issue amounted to SEK183bn as of March 31, 2018.

Handelsbanken, which was the second most prolific provider in Sweden in 2017 (with a market share of 15% from 105 products worth SEK2.1bn) only issued six products (SEK62m) during the quarter (1Q17: SEK447m from 23 products). The bank's products were exclusively linked to equities and included three products linked to the Solactive Sustainable Development Goals Index. Whereas previously Handelsbanken always used local firms, such as Garantum, Skandia and Erik Penser, to sell its products, this time around all products were distributed via its own network. In Denmark, the bank was the issuing party behind Jyske Bank's JB BASF 2021 which was available to private banking investors and sold DKK49.65m (€6.7m).

Handelsbanken reported its bond issues during the first quarter increased to SEK69bn (December 31, 2017 SEK57bn), consisting of SEK53bn (SEK47bn) in covered bonds, SEK8bn (SEK10bn) in senior bonds and SEK8bn (0) in dated subordinated loans. During the quarter, the bank issued a 10-year subordinated loan in euro, with the first repayment after five-years. Fund management commissions decreased by 6% to SEK889m with SEK38m of the decline attributable to the fact that management fees from discretionary asset management have been reduced as a result of the introduction of the markets in financial instruments directive (Mifid 2), according to the bank.

SEB came third in both Sweden and Finland while the bank also launched a private placement in Norway. In Sweden the bank sold five products with combined sales of SEK230m (1Q17: SEK397m from 20 products) including Kreditobligation High Yield USA Kvartalsvis nr 3293, a five-year credit-linked note (CLN) distributed via Garantum which was Sweden's highest-selling product for the quarter (SEK116.5m). In Finland SEB was the manufacturer behind nine structured products worth €23m (1Q17: €14m from eight products).

SEB reported the effect from structured products offered to the public for the first quarter was approximately SEK175m (Q4 2017: SEK5m) in equity related derivatives and a corresponding effect in debt related derivatives SEK-20m (Q4 2017: SEK110m). Net fee and commission income was negatively affected by lower retrocessions from the fund companies related to Mifid 2 inducement restrictions, according to the bank.

'Financial markets were at the start of the year impacted by the implementation of Mifid 2, affecting also financial institutions' activity levels,' said Johan Torgeby (pictured), SEB's President and CEO, commenting on the first quarter result. 'With more volatile equity markets, private individuals grew more cautious and increased their demand for low-risk investments.'

Danske Bank was the fourth most active bank in Sweden with a market share of 10% from 11 structured products worth SEK189m (1Q17: SEK289m from 22 products). In Finland the bank remained the most prolific issuer, although issuance and sales in the first quarter -12 products with a volume of €32m - was down on the same period last year when 18 products worth €50m were sold. However, the bank did not issue any products in its local market Denmark where it had held a 15% market share in the first quarter of last year.

During the first quarter of 2018, Danske issued senior debt of only DKK1bn, as the bank awaits the legislation on non-preferred senior issuance, and covered bonds of DKK9bn, bringing total new long-term wholesale funding in the first quarter to DKK10bn.

Nordea did not market any structured products at all in Sweden during the first quarter, while its issuance in Finland was limited to just two products, according to SRP data. Last year the bank had finished fourth in Sweden with a market share of 10% from SEK1.3bn worth of structured product sales while the previous year, in 2016, the bank had topped the table with sales of SEK3.6bn. However, as a result of an internal reorganisation which saw the merger of the bank's Danish, Finnish and Norwegian subsidiaries, structured products have been divided, with distribution and advisory moved out of a market division that continues to include structuring and issuance.

Nordea reported it issued approximately €7bn in long-term funding in the first quarter. The net fair value result for its business units increased to €292m, from €179m in the previous quarter. The underlying business level in the first quarter was negatively affected by new regulation (Mifid 2) and lower customer activity, according to the bank.

Click the link to view the full first quarter 2018 results for Danske Bank, Handelsbanken, Nordea, SEB and Swedbank.

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