Erste Group Bank has launched its first two primary market products for retail investors in Romania. The largest provider of structured products in Austria introduced itself in Romania in 2010, offering warrants with knockouts and tracker certificates on the Bucharest stock exchange. "Erste has been offering structured bonds to Romanian investors... mainly as private placements, but this year we started with two public offers," said Thomas Mlekusch (pictured), a salesman in capital markets, fixed income and certificates at Erste in Vienna.
The offerings for the two retail products, which are denominated in Romanian leu and represent the classic structures offered by Erste in Austria, Germany and Hungary, were started in February. The seven-year Eurostoxx Select Dividend 30 Garant Bond 2017-2024 is a capital-protected structured bond linked to a smart beta index, paying a fixed 2.0% annual coupon. At maturity, as well as the return of capital, the product offers the rise in the index above its initial level. The product struck on March 2, with an aggregate principal amount of RON1.5bn (€332m) in denominations of RON10,000, although sales amounted to RON10m by the end of the subscription period.
The second product is a one-year, worst-of reverse convertible: the 11.80% Protect Multi Germany 2017-2018. The structured note is linked to a basket of shares from Adidas, BMW, Infineon and offers a fixed coupon of 11.8% pa at maturity. If the worst performing share does not reach or breach the 70% barrier, investors receive their capital back plus the coupon. Otherwise, investors participate in the performance of the worst performing share at the final observation date. The product struck on March 2, with an aggregate principal amount of RON500m in denominations of RON5,000. The product accumulated RON2.5m by the end of the subscription period.
"We see an increasing demand for guaranteed, express and worst-of notes in leus, euros and US dollars," said Mlekusch. These structures are "the most sought after, and we are planning to offer them again in the future."
The Austrian bank offers underlyings that have proved popular in the other markets in which it is active, such as smart beta indices and share baskets comprising blue chip equities, especially "international indices and equities from the US, Europe and Germany."
The new products are not listed there are no "plans to list them locally for the time being", according to Mlekusch.
The Romanian structured product market is relatively undeveloped, with competition in the retail structured products limited to other foreign banks, namely Raiffeisen and Societe Generale, according to Mlekusch.
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