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Banks battle for structured products business

While FICC, flow and corporate finance volumes languish, structured products and the equity derivatives that underpin them are enjoying robust growth. Global investment banks are eager to supply the products, while the need for returns and governance solutions is driving demand. Nick Lord reports.

THE STRUCTURED PRODUCTS business is enjoying a strong renaissance after being virtually wiped out during the financial crisis. According to, there are now $1.3 trillion of structured retail products under management globally, a size comparable to the global hedge fund industry. This doesn’t include private deals for companies and institutions, which might double the overall size of the market. And it is a business that is growing while other areas of banking are shrinking: since 2008, volumes are up by 4%, with sales growth in 2011 expected to be between 15% and 20% higher than in 2010.

Banks are cashing in. They are attracted to structured products’ fees, low leverage requirements and opportunities to help clients through financing skills in ways that are not available in other markets. The sector is becoming a key area of competition for the banks that is likely to drive overall profitability within all the global institutions.

It is also keenly competitive. In Euromoney’s recent Awards for Excellence, there was intense competition for the best structured products house award. "It was a very tough year in 2009 for the structured products environment and there were only one or two banks that were really left in the business," says Benjamin Raccat, head of product development, cross-asset solutions, at Société Générale in France.

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