During what has been a difficult period for the Italian market, BancoPosta has led the distribution of derivatives-based investments there. Many major Italian distributors, including UniCredit, Banca Intesa, San Paolo IMI and Banca Popolare Italiana, have been occupied with merger or takeover plans throughout 2006. Meanwhile, BancoPosta has continued to do what it does best - distributing quality structured products to the demanding Italian market.
BancoPosta is the financial arm of the Italian post office (Poste Italiane), which also includes insurance distributor Poste Vita. While many of its competitors are regionally focused, BancoPosta has the distribution advantage of having branches all over Italy. This extensive branch network has enabled it to distribute structured products on a mass scale. So far in 2006 it has distributed more than EUR3.8 billion worth of structured products according to Rome-based Massimo Di Gianfrancesco, a member of the debt and capital markets team at BancoPosta. In fact, BancoPosta has already increased its sales of structured products by around EUR870 million so far in 2006 compared to this time last year. This represents a significant achievement in a market that has been contracting in 2006. According to a report from French investment bank BNP Paribas, overall sales of retail structured products in Italy were down 38% in the first four months of 2006.
BancoPosta, like many of its rivals in Italy, does not structure its own products. Arguably, however, it has been the most resourceful distributor in sourcing the best structuring houses. In 2006, it has predominately used the structuring services of Merrill Lynch, Bank of America, Calyon, Banca Caboto and WestLB, Di Gianfrancesco says. BancoPosta always selects issuers of a high standing and those who can provide capital guaranteed products, says Maurizio Di Luzio, head of debt capital markets and derivatives at BancoPosta.
Owing to its buy-side power and full open architecture BancoPosta is able to demand the best deals from issuers. As a result, it has managed to noticeably improve the price and quality of the structured products it distributes.
One of its most innovative products this year is the 2006-2012 Reload 3 BancoPosta IV. The product is 100% capital guaranteed and is linked to an index basket incorporating the DJ Eurostoxx 50, S&P 500, Nikkei 225, Hang Seng Index and the Swiss Market Index. It is an income product paying fixed annual coupons until maturity. If, on the annual observation dates, none of the indexes close below the 90% barrier, a snowball coupon is also paid and a coupon is locked in for the remaining years. It was offered as a three- and five-year investment and sold more than EUR1 billion in several tranches throughout the course of 2006.
The insurance partner of BancoPosta has also been an active issuer of structured products wrapped in an insurance policy. Poste Vita is the leading issuer of this popular wrapper in Italy. Its Brazil, Russia, India and China (Bric) product has sold more than EUR500 million in the retail market. The product, structured by HSBC, uses a Bric CPPI managed fund to provide investors with a guaranteed return of 115% of capital and 30% participation in any increase in the fund at maturity. Poste Vita has also successfully issued a CPPI fund product that was structured by French Investment bank Casam. The Fondo Centro Piu was a 100% capital-guaranteed fund that sold EUR320 million in 2006.
BancoPosta aims to be the most diverse, reliable, transparent and affordable distributor in Italy, Di Luzio says. And its impressive sales figures are testament to the fact that BancoPosta is on its way to achieving this lofty goal, if it hasn't done so already.
WHY BancoPosta WON
BancoPosta has called on the best structuring houses from all over the world to distribute products to the Italian retail market. In a period of transition for the Italian market, the bank has continued to sell structured products in large volumes. Unlike the majority of its competitors, it is active in both the north and south of the country.
The week on Risk.net, December 2–8, 2017Receive this by email