Structured products house of the year: BNP Paribas

Risk Awards 2026: Innovative structures such as the catapult helped propel US issuance to new heights

Fatos Akbay and Alexandre Dupuis

Photo: Juno Snowdon

In structured products, French banks have long shown a certain savoir faire. With a rich financial engineering history and local regulations supporting complex instruments, the country’s firms have scattered their expertise across Europe and Asia. Now, US investors have begun to embrace yield-enhancing autocallable notes, unlocking a lucrative market for the winner of this year’s award for best structured products house.

BNP Paribas revved up its issuance of US structured products by 47% in the first three quarters of 2025. With $11 billion of notional from over 6,000 products, the bank leapfrogged some of its vaunted rivals, including Barclays and UBS, to seize fifth spot in the SPi structured product league tables.

This issuance boost provided much of the fuel for “a historic year”, according to Azad Mahavar, BNP Paribas’s global head of equity derivatives structuring and head of structured products sales for Europe, the Middle East and Africa (Emea). “It’s the first year where all the engines have been working full speed at the same time.”

We will never be one of those banks that passes all the risks

Fatos Akbay, BNP Paribas

In Europe, the bank filled niggling gaps, adding independent distributors in France and Switzerland to grow market share. The team capitalised on key themes to create structured investments around changing geopolitical narratives, most notably a strategic push in Europe for greater self-sufficiency and security, a move which would be assisted – and challenged – by its environmental, social and governance (ESG) ethos. 

In Asia, a long-standing technology investment paid off as the bank handled more than 150,000 daily quotes and scaled up payoff innovations to improve performance.

A step-up in risk-recycling capabilities was crucial for keeping the engines chugging. The bank increased its back-to-back recycling activities with hedge funds by a factor of three in 2025.

“This frees up capacity and helps us price on parameters which are illiquid,” says Mahavar. “The whole exotics business is about carrying illiquid inventory. Because of the scale of this [recycling] business and the fact it is trading on a daily basis, it helps us put a price on some of the risk in our books.”

The bank has strict limits on how much it is willing to share. “We will never be one of those banks that passes all the risks,” says Fatos Akbay, BNPP’s head of global markets structuring for Emea. “We are comfortable carrying that risk as long as we give ourselves comfort on mark-to-market levels of those illiquid instruments.”

She notes the steep technology investment required to set up these back-to-back programmes. “This is here for the long run, and not just in equities, but in credit and rates as well.”

Clients singled out the bank for its breadth, innovation and pricing. One European distributor described it as an “outstanding” counterparty. Another noted it as “consistently in the top” of a large counterparty mix.

Atlantic crossing

It’s the US effort which stands out as transformational.

The culmination of an 18-month investment, the bank more than doubled its US structured sales team. Sales through private banking channels, where the bank already had a core US business, grew by 30% while activities via broker-dealers and registered investment advisers more than doubled.

“My view is it’s just going to keep on growing,” says Nicolas Georges, head of cross-asset distribution sales in the Americas. “The country is sitting on trillions of dollars of assets and clients finally understand the beauty of structured notes and how to position them in their portfolios.”

By the end of the third quarter, the bank reckons it covered 80% of the potential US client base, rising to 90% by November, leaving it eyeing a top three ranking.

“Now that we’ve gained market share and opened many clients, we can position ourselves as leaders, within innovation as well, which is happening now,” says Georges.

A favoured variant was the catapult payoff, for which BNPP issued over $2 billion since the start of the year.

There has been a very strong acceleration of volumes, and what was a very good year has become an amazing year

Azad Mahavar, BNP Paribas

The structure combines the yield enhancement characteristics of a traditional autocall with the upside participation of buffer notes, a commonly traded structure among US investors.

Structured in three- to five-year maturities with exposure to major indexes such as the S&P 500, the instrument is called if spot is above the knock-out barrier after one year, repaying coupons and principal. If it is not autocalled, investors receive their coupon and the note transforms into a buffer structure, offering leveraged exposure to the underlying, typically at 150%.

In a rare example of structured product innovations making an easterly Atlantic crossing, BNP Paribas imported the structure to Europe. Mahavar says the bank traded catapults with 26 different clients in Switzerland, UK, France and Finland.

“We’re not yet at the size of the US, but will be soon I imagine,” he says.

In Europe, the bank retained a top tier presence. A 12.9% share of structured note issuance for the first half, up from 11.6%, placed it at number two spot, though a bulging post-summer pipeline left Mahavar optimistic for a top level finish for 2025.

“There has been a very strong acceleration of volumes, and what was a very good year has become an amazing year,” says Mahavar. 

A bit of luck didn’t go amiss, with the bank winning some of the largest campaigns across Europe. “With those trades the coin can flip one side or the other side. Luckily this time all the coins were flipping on our side,” says Mahavar.

Sustainability springboard

Much of BNP Paribas’s structuring business has a green hue. The bank offers structured products on a range of sustainability-related indexes and has raised over €7 billion ($8.1 billion) from green bonds, which direct proceeds to specially screened assets. In 2025, the bank carved out a separate ‘blue bond’ framework and sold its first autocallable notes linked specifically to ocean preservation and clean water.

The election of US president Donald Trump for a second term in November 2024 threatened to dent those efforts. A rollback of the superpower’s climate commitments and a clampdown on diversity, equity and inclusion (DEI) activities put socially responsible investing on the back burner for many global investors. 

For BNP Paribas’s ESG platform, the evolving geopolitical landscape presented challenges and opportunities.

In September 2024, European Central Bank governor Mario Draghi published a new road map for European competitiveness, calling for co-ordinated industrial policy across member states and prioritising energy security.

Nicolas Georges, BNP Paribas

BNP Paribas set to work on a two-pronged approach to the EU sovereignty theme, creating an equity index for use in structured products and leveraging its green bond framework to create a platform that directs proceeds to assets in key sectors identified in the Draghi report. These include energy, transport, energy-intensive industry and – more controversially – defence; a delicate area for a bank with high-profile ESG credentials.

Adding the sector to a platform originally designed with sustainability in mind may seem daunting. However, an evolving geopolitical backdrop added urgency to the effort – most notably following February’s dramatic White House spat between Trump and Ukraine president Volodymyr Zelenskyy, where questions were raised over the strength of US support for Ukraine’s defence against Russia.

“In the context of the Draghi report and geopolitical tensions, there was a growing interest from investors on the sovereignty theme and we started working on the project from a blank sheet of paper,” says Akbay.

Leaning on its existing green bond technology, the bank used large language models to conduct semantic analysis of borrower activities and revenue split to gauge alignment with 10 strategic sectors identified from the Draghi report.

This included tagging loans for small and medium-sized enterprises based on based on data points the system didn’t capture at the point of origination, in a process which is auditable by a third party

The bank worked in close partnership with its retail banking arm, BCEF, which originated loans for mid-tier corporates active in this space.

The bank sold its first sovereignty bonds in early September and hit €200 million within two months of launch.

It also devised the Europe Sovereignty Select Index, published by Bloomberg. The index offers exposure to the 30 largest eurozone companies operating in the strategic sectors, and was made available with fixed dividend decrements, for improved pricing in long-dated autocallables popular with French investors.

In October 2025, the bank’s own ESG credentials came under scrutiny. A US federal jury found BNP Paribas complicit in crimes committed by a previous government in Sudan, and it was ordered to pay almost $21 million in damages. Although unrelated to BNPP’s structured products or market operations, and relating to a two-decade-old sanctions breach for which the bank settled in 2014, the attention sparked debate around whether ESG-focused funds might ditch the bank’s paper.

Five structured products clients told Risk.net they have no plans to reduce exposure to the dealer in light of the court ruling. BNP Paribas has already confirmed its intention to appeal, and while it won’t comment on the matter, is understood to be making itself available for discussions with clients seeking more information.

From CMS to CMT

One of the biggest structured products trends of recent years has been growing appetite for interest rate products. By 2025, demand for the most vanilla products – fixed rate callable notes – was giving way to more complex structures with juicier returns.

This played into BNP Paribas’s structuring versatility.

“We are well integrated between asset classes, be it replicating the successes or getting inspired from the equities world to others and vice versa. There are few other banks who have that fluidity,” says Akbay.

Autocalls and other structures such as range accruals on constant maturity swap (CMS) rates have proven popular in recent years, though some investors are reluctant to hold exposure to an underlying which is not directly observable.

The CMS reflects a 10-year rolling interest rate swap which re-fixes daily. An alternative and increasingly popular approach sees products reference a constant maturity treasury (CMT) index – a measure of sovereign bond yields.

All of a sudden, sovereign risk has started to pay

Frederic Schiltz, BNP Paribas

France has been a leader in this trend, with the French Trésor publishing an official index tracking yields on 10-year OAT government bonds since 1996. The US Federal Reserve also publishes a CMT index of 10-year US Treasury yields.

These are becoming a favoured underlying for rates structured products.

“It’s an underlying that’s more familiar to the clients. Usually they will know the worth of the 10-year Treasury of their own or a different country, while swap levels or other underlyings might be less easy for them to read,” says Frederic Schiltz, BNPP’s head of products structuring for Europe, the Middle East and Africa.

A preference for single country risk also reflects growing yield divergence between Eurozone issuers. Prolonged French political turbulence – with a snap election in 2024 delivering a hung parliament – helped drive yields on 10-year OATs as wide as 80 basis points above Germany and higher than Italy and Greece.

“All of a sudden, sovereign risk has started to pay,” says Schiltz. “Italy was one of the few countries in Europe where you could get paid for sovereign risk, but now others are paying.”

BNP Paribas sold around €800 million of structured products linked to CMT indexes, including range accruals and autocallables.

Asia magnetism

In Asia, 2025 was a year of volume growth. Activity on highly automated multi-dealer platforms jumped by 50% in the first half to reach $80 billion equivalent. BNP Paribas reckons that represents 60% of a market worth not much less than $300 billion a year.

A long-term investment in technology meant the bank was well placed to absorb the flow, handling 150,000 quotes per day – a tenfold increase since 2017.

“We had to change the way we price,” says Timothy Parker, BNPP’s head of equity derivatives for Asia-Pacific. “We need more computational power and need to be more nimble and agile to cater to those volumes, so infrastructure development has been key to maintaining market share.”

Amid the deluge, the bank found areas for innovation.

One of the biggest success stories in the region was the Magnet autocall payoff, on which the bank traded $500 million notional, including $300 million in Taiwan.

It’s an adaptation of the traditional worst-of autocall aimed at improving the changes of the structure knocking out.

Worst-of autocalls use correlation between different underlyings – typically two to three single stocks or indexes – for chunkier coupons. Typically one year in duration, worst-of autocalls pay coupons for every month that spot is above the barrier – typically set at 90% to 100% of the initial level. A magnet version sees the autocall barrier reset downwards at the end of each month, reflecting the movement of the worst performer in the basket.

“It costs a little more but it’s maximising your ability to generate a very compelling level of yield and allows us to extend the number of stocks in the basket, offer a high yield but with a higher likelihood of a payout,” says Parker.

An additional Falcon payoff saw barrier levels tailored to individual names in worst-of baskets, rather than applying a standard barrier to the full basket.