SEB, one of the historically leading manufacturers and providers of structured products in Sweden, has now exited the market.
Sweden’s Skandinaviska Enskilda Banken (SEB) has stopped launching all types of structured products for the foreseeable future with immediate effect after an internal decision was made, a senior source at the bank told SRP.
The Swedish bank halted all new structured products business at the end of 2019 although “any products still selling we will of course honour and do the trades," said the source.
The decision to shut down its structured products business is not related to the current market conditions and was mainly “a cost driven decision".
The bank will continue to honour client commitments including providing secondary market pricing for outstanding products.
However, the bank will not be offloading its structured products books for now the time being. “What happens in the future is unknown but we do not expect to enter the structured products market again,” the source told SRP.
There are five SEB products currently sold by Garantum Fondkommission, which will close their subscription on Friday (January 23).
“The fact that big players have decided to exit the market is of course unfortunate,” said Garantum CEO Mikael Axelsson. “My guess is that they will be back before long. Structured products are trending strongly in the rest of the world and particularly in important asset management hubs such as Switzerland.”
Axelsson pointed that there is “no reason why the Swedish market should deviate from that trend over a longer term”.
“For now, we extend our gratitude to SEB for the past three and a half years,” he said. “Together we brought more than 100 solid investment alternatives to our end clients. Total volume exceeded SEK 3.5 billion and up to this day all the products have delivered in accordance with expectations or even above.”
More casualties
SEB’s pull out follows the exit of another big Swedish player, Swedbank, which announced in August that would stop offering its structured products range SPAX Nu and SPAX Bevis.
Swedbank continued to distribute structured products via small saving banks such as Sparbanken Skåne and Sparbanken Sjuhärad but this dried up by December, coinciding with SEB’s decision to withdraw.
According to SRP data, Swedbank was the most prolific issuer of ESG themed products issuing half of all ESG products offered during the first half of 2019.
According to SRP data SEB was the top Swedish issuer in 2019 with a market share of 20% from 93 products worth an estimated US$198m, while it came third in Finland with a market share of 17% from 41 products worth US$137m. Altogether, the bank issued 134 products in 2019 worth an estimated US$336m.
Meanwhile Swedbank issued 93 products in Sweden worth an estimated US$122m and a market share of 13%. SEB has altogether issued 2,232 products in eight different markets worth an estimated US$9.8bn while Swedbank has issued 1,818 products in four different markets worth estimated US$10bn.
As the two issuers abandon their structured products activities, the Swedish market has seen a recent influx of foreign players with seven out the top 10 issuers in the country in Q3 2019 being a foreign investment bank.
Swedbank did not return calls and emails seeking comment.