The bank is one of the few players in the structured products market that has managed to grow its market share, in spite of continued drops in Sweden and Norway.

The structured products provider has been the top distributor in recent years and won last year’s SRP Best Distributor, Nordics award. Garantum has also won the country awards for best distributor and best performance in both Norway and Sweden while being shortlisted for a number of regional awards categories including ‘Best Distributor, Europe,’ ‘Best Distributor, Nordics,’ ‘Best Yield Enhancement Distributor, Europe,’ and ‘Best Performance, Europe’.

The company saw sales volumes shrink by 23% (153 issues worth SEK3.3 billion/US$355m) in its main market of Sweden yet managed to take the biggest market share and remain at the top spot for the third consecutive year. In Norway, issuance was on level with 2017 figures but in terms of sales the race was extremely close with Nordea. Garantum came out on top due to higher average on performances than Nordea during the same period.

SRP talked to the two country chiefs Joern Kjorsvik (Norway) and Mikael Axelsson (Sweden) (pictured), about the company’s consistent performance last year despite a volatile and challenging market.

“I am glad it’s over,” Axelsson told SRP.

Kjorvik said that despite being a challenging year, 2018 still had its merits. “It was not a lost year,” he says. “It was an investment in 2019.”

According to Axelsson, the Nordic market is characterised by the “strong performance of structured products despite extremely low interest rates and choppy equity markets”. Kjorvik points to the shift in investor appetite for risk on the back of movements in the equity markets during 2018.

“Investors started to see the end of a strong positive trend in the equity markets that lasted 10 years,” he says.

Launching the first public offering of a structured product based on a green bond was a highlight for Garantum in Sweden.

"Garantum has always been a pioneer in structured investments, but it is not every day we get the opportunity to break new ground in an area like green finance," says Axelsson. "Our mission is to create the right placement at the right time and few things can be better than an investment that has a positive impact on society and the environment. We look forward to continuing to utilise the flexibility of structured placements to offer varied sustainable exposure efficiently. And while it's always fun to be the first off with something significant, we now want more players to discover the potential in this."

Axelsson notes that Garantum’s edge rests in its capacity to “meet commercial, technical and regulatory challenges head on”.

From a product perspective, investor demand for credit-linked notes increased last year in Sweden. In Norway, it shifted mid-year after being high risk as investors begun to seek guarantees.

“2018 made our clients change their demand,” says Kjorvik. “Norwegian clients previously wanted us to provide them with products with high returns and accepted high risk in the period from 2013 until the first half of 2018. At some point during 2018 Norwegian customers lost their appetite for risk, and gradually got more curious and interested in capital protected products.”

Kjorvik expects capital protected products to represent the best opportunities for both clients and Garantum.

“The growth with respect to new clients was good [in 2018] and our position in the Norwegian market improved because of strong performance by our products despite a poor equity market. I expect increased share of mind amongst our existing clients,” says Kjorvik. “We are now becoming a more important and trusted partner for our existing clients, the reason being that we deliver what we promise. Our existing clients are gradually using us more.”

 For the Nordic market in general Axelsson expects markets to behave much like they did at the end of 2018. “More volatility and no clear direction,” says Axelsson, adding that this will make structured products a very attractive alternative.

“And we pray for higher interest rates so that capital protected products will once more come to the fore!,” he adds.

Garantum Fondkommission was established in 2004 as a specialist in structured products and is privately-owned. It has offices in Sweden, Helsinki and Oslo with all partners active in the company. The company is one of the largest players in the Nordics having distributed 2,681 issues worth US$5.1 billion so far, with almost 90% of the sales coming from the Swedish market.