Earnings season unveils damage on Barclays trading book, triggers CS’ reorganisation as Singapore regulator gives green light to structured products transacted via blockchain.

We ended the week with a follow up on the Credit Suisse upcoming restructuring. SRP spoke to Michael Ebert, the new co-head of markets at Credit Suisse alongside Ken Pan, to find out where the cuts will be applied, the new markets strategy and the role of the structured products business within the new set up.

The new market unit will contain the bank’s sales and trading capabilities across all the asset classes and aims to leverage our robust and strong offering across equities, FX, rates, as well as structured credit including notes and repacks.

Ebert and Pan’s team will focus on wealth management clients and will aim to generate around half of its revenues from clients of the Swiss bank and wealth divisions, leveraging the distribution channels established by the global trading solutions franchise to deliver equity derivatives, structured products and rates and FX execution services to family offices and ultra-high-net-worth individuals.

The over-issuance also contributed to operating cost of £503m during the three months, leading to £3.6 billion statutory costs

Another leading issuer in the structured products market, Barclays, saw its financial performance impacted by the over-issuance of structured notes and exchange-traded notes.

The UK bank reported in its Q3 earnings report that the over-issuance led to a hedging loss of £466m, which resulted in statutory income of £6 billion, in contrast to the hedging revenue of £758m a quarter ago. The over-issuance also contributed to operating cost of £503m during the three months, leading to £3.6 billion statutory costs.

The bank’s overall income of £6.4 billion (US$7.1 billion) in Q3 22, was up 16.4% year-on-year (YoY) with the global markets division reporting a fall in income of 10% to £2.8 billion YoY.

On the product side, S&P Global announced revenues of US$2.86 billion for the third quarter of 2022 – up 37% compared to the same quarter last year – with continued execution driving growth across multiple business lines including index licensing for investment products.

The financial information and analytics provider had 7,539 structured products (excluding flow- and leverage) linked to S&P indices had strike dates in Q3 2022 – up 12.6% by issuance YoY, according to SRP data.

We also saw the return of BNP Paribas Fortis to the Belgian market with its first equity-linked note in 15 months. The distributor has launched the Callable Note Eurozone 2030 in Belgium - an eight-year fully protected medium-term note that offers 100% uncapped participation in the Eurostoxx 50 index.

This time BNPP Fortis has opted for the more mainstream Eurostoxx 50 as the underlying index; whereas past issues were often linked to specific themes such as megatrends (MSCI World IMI Select Trend Accelerators Index) or strategy & factor indices (Solactive Deep Value World MV ex-DA PR Index).

In South Korea, the Korea Securities Depository (KSD) reported that the outstanding balance of derivative-linked securities (DLS) and derivatives-linked bonds (DLBs) reached a two-year high at the end of Q3 2022.

The balance amounted to KRW31.6 trillion (US$22.3 billion) on 30 September, up 16.2% year-on-year (YoY), or an increase of 7.8% quarter-on-quarter (QoQ). It represented an 8.6% decline from the peak seen last time at the end of Q1 2020. However, the combined DLS/DLB market shrank by 7.2% to KRW3.4 trillion by issuance amount from July to September. 

In Singapore, the Monetary Authority of Singapore (MAS) announced a new industry pilot in wealth management which saw HSBC, UOB and Marketnode collaborating to enable native digital issuance of wealth management products.

The two banks have partnered to test the digital issuance of wealth management products via distributed ledger technology (DLT) infrastructure provided by Markenode, a joint venture between the Singapore Exchange (SGX) and Temasek.

The arrivals and departures terminal lounge also saw several high profile moves with the former managing director and global head of new products and innovation, financial engineering at Natixis Corporate & Investment Bank (CIB), Aurelien Rabaey landing at French advisory boutique Galite Partners as a managing director.

Rabaey has reunited with his former boss Selim Mehrez who was global head of equity derivatives and global head of fixed income at Natixis Corporate & Investment Bank (CIB) until September 2021.

Other moves include the appointments of Sophie Qian as head of equity capital markets (ECM) for Southeast Asia at J.P. Morgan; Ilja Rempel as head of risk at Frankfurt-based pan-European trading venue Spectrum Markets; and Jean-Paul Servais chairman of Belgium's Financial Services and Markets Authority (FSMA) as chair of the new International Organization of Securities Commissions (Iosco) Board.

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