The year 2020 will be remembered for the Covid-19 pandemic that has practically wiped out most of the top structured product providers and showed that diversification is the key for survival even among the most sophisticated product providers in the market.
What the industry has seen is nothing short of a bloodbath as it grappled not only with the fallout of the health crisis but also with trade tensions and other geopolitical forces. The stock market crash in March had an outsized impact on those players who had been either overly aggressive in issuing structured products or whose hedging strategies were ultimately found to be ineffective.
BNP Paribas reportedly lost an estimated 200 million euros (US$219 million) on equity derivatives as of April, Natixis has lost about 250 million euros in equity derivatives as of May, and Societe Generale has reportedly lost 400 million euros on structured products as of August.
For structured product providers, there are two lessons that have to be learned from this year’s experience. First, having the biggest market share in high-yielding but high-risk products may be fine in normal times but could prove disastrous when a pandemic hits. Second, the key to surviving in highly uncertain markets is hedging not just volatility but even the most seemingly insignificant risk.
In the end, it can be said that the key to being the best-structured product provider is having a diversified portfolio of relatively low-risk, as well as, well-hedged products.
It is in this context that we announce the winners for the The Asset Triple A Best Bank for Investment Solutions Awards 2020.
Credit Suisse wins the award for Best Bank for Investment Solutions (Asia), Best Bank for Investment Solutions, Equity (Asia), as well as, Best Bank for Investment Solutions, Credit (Asia). The bank demonstrated its structuring capability across different asset classes and delivered innovative investment and financing solutions to its clients amid the market turbulence.
Goldman Sachs wins the award for Best Bank Investment Solutions, Multi-Asset (Asia) and Best Bank for Investment Solutions, Rates (Asia). During the awards period, Goldman Sachs has made significant achievements in improving the scalability and breadth of its platform and offerings across different asset classes.
BNP Paribas Wealth Management (BNP Paribas WM) wins the award for Best Bank for Investments Solutions, FX (Asia). BNP Paribas WM has its own structured products team that is different from BNP Paribas Investment Bank. Despite G10 rates converging near zero and continued softness in the US dollar, BNP Paribas WM launched several innovative FX solutions to its clients at higher yield and with flexible tenors.
CIMB is recognized as Best Bank for Investment Solutions in Malaysia for 2020. CIMB continued to be the dominant issuer within the Malaysian structured product space with the continuous take-up of its flow structures. In light of the current low-yield market conditions, the bank has undertaken to explore higher-yield structures referencing to various asset classes.
CIMB Thai is recognized as Best Bank for Investment Solutions in Thailand for 2020. CIMB Thai has been able to attract new talent and leverage the Group’s expertise and resources in its derivatives and structured product capability, from product innovation, pricing, structuring, and risk management down to sales and distribution.
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