Education is the cornerstone of Credit Suisse's rise in the Americas over the past 12 months. Alongside this, the bank has produced an enviable product range, increased its presence in Canada and Latin America and has the good fortune to be offering its Holt range in the Americas at a time when enhancements to research-based analysis are all the rage.
Credit Suisse has increased its structured products business to 600 transactions in 2007, a step up from 350 in the previous year, on a notional of around US$3 billion. The bank's increased commitment has been rewarded by new business across the Americas. "It is good at education, good on minimums, and offers a one-stop shop on its website," says one US distributor. "It has also leveraged its Holt research and I am impressed with the change - it had been very minimalist in the past."
The past 12 months in the Americas has seen the end of the bull market and the start of a turbulent combination of volatility and illiquidity. Throughout, Credit Suisse has distinguished itself by the variety of its products, its impressive educational initiatives, and the broad scope of its business.
In the US, the bank is proudest of the work it has done with major distributor Raymond James, which approached Credit Suisse in 2007 asking for a unique way to access infrastructure in emerging markets. The bank needed look no further than its Holt index engine to uncover the (sophisticated) raw material that it could introduce into a custom-designed index providing exposure to the top 50 infrastructure names that had at least 20% of their sales in emerging countries.
In October 2007, it placed US$53.3 million in two structured notes listed on the American Stock Exchange. The first offered access with enhanced leverage on the upside; the second was a buffered structure with partial downside protection and a one-for-one upside participation. "We are planning an exchange-traded note linked to this index, probably in April," says Mike Clark, New York-based head of structured retail products for Credit Suisse in the Americas. The bank was on the cusp of completing its exchange-traded note platform at the end of March, as Structured Products went to press.
"Merrill Lynch selected us as one of its providers, partly for our credit strength, but it also wanted to hook into our stable of proprietary products in the US," he says. This March, Credit Suisse became one of the providers chosen by distributor Oppenheimer, with well over 1,000 advisers. Education was key and technology important, "though they were also looking for Credit Suisse to get access to thematics," he says.
The bank has continued to perform well in Latin America, completing more than US$1 billion of structured products business in the region in 2007. Gaining a foothold with distributor Banco Santander was a coup, with the thematic products linked to Holt enabling Credit Suisse to obtain an agreement for primary distribution with the Spanish bank. "We have done Holt-linked deals with several distributors focused on Latin America," he says. "We have also approved three or four indexes for Mexico and will probably have the first family of intelligent indexes there. We are hitting a new phase in Mexico - this year we expect to introduce Holt US, Holt Japan, Holt Germany and Holt Switzerland. We are also creating a Holt LatAm index - and apart from the latter, most have been approved by the Mexican authorities for use by the pension funds. In Canada, we are trying to form distribution networks outside of the big six local banks, creating a nucleus of distributors that give us premier shelf placement. We are in phase one of the build out."
Jill O'Neil, equity capital markets director at Richardson Partners Financial in Canada, says how, in a first for Canada, the bank "offered a buffered accelerator structure into one of our Ottawa advisers in July to a client of ours. The quality of their presentation from the term sheet to the value of the pricing is far ahead of other banks."
The bank hopes to have its own Canadian registered issuance in April or May. "We have won a significant amount of mandates on the basis of our strategy: one, have the best education; two, have the best technology; and three, provide access to the proprietary product." The bank was also chosen by Canada's GMP Capital as its only select provider. "We are the only investment bank that has a full-time person dedicated to expanding the education platform and working with clients," says Clark.
After education, the biggest issue for distributors is secondary liquidity. "We brought in Secnet - an online graphical user interface that enables people to sell structured products back to us in 30 to 60 seconds without using the phone," he says. "It goes straight through to the trading book and is cross-asset class. On Advisornet, the bank can roll out individual websites customised for each client, with its proprietary research piped in.
The week on Risk.net, July 7-13, 2018Receive this by email