The creation of Credit Agricole Structured Asset Management (Casam) last year undoubtedly benefited Credit Agricole, the largest high-street banking group in France. And it hasn't take too long for the effects to be seen, with the launch this year of an array of innovative structured products by the retail bank, all structured by Casam.
Several closed-ended options-based structured products, issued by Credit Agricole and others, have been launched this year as a result of the Fourgous amendment, introduced by the French government in July 2005. The amendment, seen by major structured products issuers as a golden opportunity to introduce new offerings, allows investors to convert their non-unit-linked life insurance contracts into a multi-investment policy without giving up tax benefits.
However, while many products emanating from the implementation of the Fourgous amendment provide high coupons, they do not offer 100% capital guarantees. So, in March, Credit Agricole launched a capital-guaranteed fund through a life insurance wrapper to lure risk-averse investors who have been hungry for equity exposure. The Jayanne fund is Credit Agricole's headline offering this year, raising EUR545 million.
Jayanne is an eight-year fund linked to a basket of four equity indexes: the FTSEurofirst 80, the FTSE 100, the Nikkei 225 and the Swiss Market Index. The fund provides two options. The first offers 110% of the average positive performance of the basket, meaning investors can receive a return of up to 9.72% each year. The second option offers a fixed coupon of 5% at the end of year one and year two, and then, depending on the value of the worst-performing index, investors may receive a coupon of 5% each year thereafter.
Due to the popularity of Jayanne, Credit Agricole introduced Jayanne 2 in July. Further options-based structured funds were launched as a result of the Fourgous amendment, Pimento 2, which raised EUR175 million, Pulsia Vie, which raised EUR350 million, and Protein Vie 3, which raised EUR277 million.
Protein Vie 3 is also linked to a basket of equity indexes: the FTSEurofirst, the S&P 500 and the Nikkei 225. Launched at the end of last year, the eight-year, 100% capital-guaranteed fund pays up to 105% of the average positive performance of the basket. A bonus of 15% of the initial value of the basket is payable if the final performance of one of the three indexes is above or equal to 100%.
Credit Agricole's structured products are linked to simple underlyings with innovative payoffs so as to carry on improving sales in a mature market. In particular, the bank says the life insurance structured funds are developed for investors who have been investing in euro funds, so capital protection is a key feature, as well as equity exposure and high coupons.
Credit Agricole is one of the few providers to use the FTSEurofirst indexes as an underlying for its structured products. The FTSEurofirst index series was launched in April 2003 by FTSE Group and Euronext.
Credit Agricole's structured funds, manufactured by Casam, are marketed by regional banks and Credit Lyonnais, now LCL, which Credit Agricole acquired in 2003. Impressively, Credit Agricole now has about 26% market share in France. "Every product has a marketing story," says Andre Pasquie, head of business development with Credit Agricole's regional banks. "We remain close to our networks and this is how we detect trends in the market." In total, 41 new structured funds were launched in the past year, raising EUR4.3 billion.
WHY CREDIT AGRICOLE WON
Credit Agricole is quick to respond to changes in the market and has produced products with a range of innovative payoffs and high coupons. The sales and marketing teams at Credit Agricole target different products at each of the distribution segments and this has led to high subscription amounts, outperforming its competitors.
The week on Risk.net, December 9–15 2017Receive this by email