Structured products are a hugely profitable business line for investment banks. They allow banks to package up risks and pass them on to third parties in the form of an investment where the buyer may win or lose, but the seller always stands to gain.
The enormous success of firms such as Société Générale and BNP Paribas, which have for many years leveraged their strengths in equity derivatives into the structured products and generated handsome profits, has prompted every major investment bank to try to get into the market.
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