Spain's distributors have their say

Spanish distributors have embraced products from structurers, most notably those from BBVA. The Spanish bank has scored well in the Structured Products distributor poll conducted last month, which also revealed the increasing sophistication of the buyer base. Richard Jory reports

Of the nine asset classes on which Structured Products polled Spanish distributors, BBVA took top spot in six and was equal first in another. Deutsche Bank shared first place with BBVA in foreign exchange, while BNP Paribas (followed by ABN Amro and Barclays Capital) were first choice for structured credit, and BarCap was best for commodities. Societe Generale took second place in four of the categories - equity, hedge funds, structured funds and CPPI - each time coming one spot below BBVA.

While BBVA scored highly in hedge funds (for which it has a market share of over 20%), equity (14% share), and hybrids (15% share), its lead over the international banks in the other asset classes was marginal.

The leading international banks, which scored well across the asset classes are: Societe Generale, BNP Paribas, JP Morgan, BarCap, Deutsche Bank, ABN Amro, Calyon, Credit Suisse, Goldman Sachs and Citi. Perhaps surprising is the lack of Spanish structurers at the top of the tables: BBVA aside, Caja Madrid came fourteenth in the structured funds table, seventeenth in the equity and the commodities table, and sixteenth for hedge funds; Banco Santander was eighth in the interest rates and CPPI tables, tenth for FX, twelfth for hybrids, and fourteenth for structured credit.

The large number of banks that were chosen as first, second or third choice in the nine asset classes led to 28 of them being recognised in the scoring for providers of equity structures. The number of banks ranked in the other eight asset classes was generally at or above 20, which endorses the response to a question asking how many investment banks distributors get quotes from. Just under 50% of distributors said they get quotes from between nine and 12 banks, with a further 40% choosing from five to eight. Within this realm, the survey revealed that only 42% of distributors choose products from their own investment banks, with 25% of them doing more than 20% of their business with these banks.

The rationale for product choice provides interesting reading, with distributors ranking innovation and pricing as the most important product features - as a sign of the increasing sophistication of the market, the two features were ranked equal first in importance. After sales support was not far behind in importance, and was followed by efficient settlement.

The results for preferred indexes provided the starkest result, with the DJ Stoxx commanding nearly 50% of the market with a market share that was nearly double that of Ibex, the local benchmark. The statistics bear out the move from products based on local to international stock indexes, which is confirmed by the clear preference for European equities as an underlying. Thirty-four percent of respondents plumped for European equities as their underlying of choice, with Spanish equities accounting for just less than 23%. In line with the continued emergence of commodities, the asset class made up just less than 15%, with hedge next at just over 10%.

Short-term products - specifically those that range from one to three years - dominate, accounting for 75% of the preference. The most popular products are income, which makes up nearly 50% of the preferences, with growth and exotic products sharing equally the remainder.

The factors that present most of a threat are interest rates and the impact of the macroeconomy; competition from other forms of investment was next in the list of most pressing concerns. Regulatory concerns were also highlighted, with over 50% of respondents saying that the work of the regulator is a significant constraint to the development of their structured products business. Despite that, nearly 50% of distributors expect the Spanish structured products market to increase in size by between 5% and 20% this year.

KEY FINDINGS FROM THE SURVEY

- BBVA was voted top in five categories, and equal first in one other.

- International banks came top in two categories, and equal first in one.

- 28 banks attracted votes for providing equity structures, and at least 20 banks received votes for the other eight asset classes.

- 42% of distributors choose products from their own investment bank.

- DJ Stoxx is the index of choice for nearly 50% of the market.

- Short-term products (three years max) account for 75% of preferences.

- Interest rates and the impact of the macroeconomy are the greatest fear factors.

A SELECTION OF SURVEY FINDINGS

Structured Products designed this survey to investigate which structurers Spanish distributors rate as the best. The survey questions were compiled by the magazine's editorial team in conjunction with some market leading structured products professionals.

The main part of the survey asked Spanish distributors of derivatives-based investments which investment banks (structurers) they think are the best in nine distinct categories. It is important to note that this poll was not designed to reflect volumes traded or market share in any particular asset class. Rather the distributor voters based their decisions on a variety of criteria, including pricing, liquidity provision, speed of execution and overall innovation. Only distributors based in Spain were permitted to vote in the survey, and those tied to the structuring capabilities of one bank were not allowed to vote in the structuring section.

The votes in the structuring section were weighted, with three points for a first place, two points for second and one for third. Structured Products only reveals the top three in each asset class and will not divulge further information on the performance of any of the banks listed in the top three, of or those banks not gaining a top three place.

The other section of the survey included general market questions on index providers, regulatory issues, preferred underlyings and wrappers, and so on.

Structured Products invited all subscribers and trialists of the magazine to take part in the survey, and alerted more than 30 structuring institutions to the survey, who then notified their distributor clients. We also placed a prominent link on our website, which allowed visitors to click through to vote in the survey. Votes by structurers, index providers, regulators, law firms and technology companies were discounted, and voters were only allowed to complete the survey once.

We will publish the full results of the Spanish distributor survey on the Structured Products website, revealing the order and market share of the banks that appear in the top 10 for each of the categories that appear on the page opposite. Results will appear on the site in the days following the publication of this issue of the magazine. To see the results, log on to www.structuredproductsonline.com.

For any other enquiries about the survey, please contact Richard Jory, Editor, Structured Products, Incisive Media, Haymarket House, 28-29 Haymarket, London SW1Y 4RX, UK, tel: [phone], email: [e-mail].

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