Vontobel Financial Products Mainfirst - Structured products in the negative interest rate environment Roger Studer, Head of IB 3 June 2015
Performance creates trust
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Cautionary statement regarding forward-looking statements
This document may contain projections or other forward-looking statements related to Vontobel that are subject to known and unknown risks, uncertainties and other important factors. These projections and forward-looking statements reflect management’s current views and estimates. They involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the projections and forward-looking statements. Potential risks and uncertainties include in particular factors such as general economic conditions, foreign exchange, share price and interest rate fluctuations as well as legal and regulatory developments.
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Vontobel is a focused boutique with an outstanding offering for specific client needs at a solid margin Wealth management
Active asset management
Financial products
Named ‘Best Private Bank in Switzerland 2014’ by Swiss business magazine BILANZ
Almost 90 awards since 2011 – from Lipper, Morningstar and other renowned institutions
Rated ‘excellent’ in Germany by investor magazine €uro in a mystery shopping test
75% of Asset Management’s AuM outperformed benchmark in 2014
Vontobel is well positioned with its technology leadership and innovation capabilities Growth initiatives in home and target markets Leading multi-issuer offering
Increased profitability despite significant investments
Actively managed assets globally (USD tn)
98%
+6% p.a.
-7.1 pp 83.1
76.0
33.0
59.0
41.0
Highly scalable platform for future growth
Vontobel products issued
Quotes in own products per day
> 200 k
> 250 mn
57.1
28.8
2012 Cost/income ratio (%) Pre-tax profit (CHF mn)
2014
2003
2008
2013
Assets under management Source: BCG Global Asset Management Survey 2014
Average cost per product < 500 CHF
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Vontobel’s derivatives factory with well-balanced business model - leveraged products & investment products Capital markets
Derivatives factory
Risk
Risk management
- Exchanges - OTC - Interbank markets
Asset classes -
Fixed income Credit Equities Commodities FX Alternative investments
3rd party wrapper / notes 3rd party issuer
Distribution B2C
open deritrade©
Leverage Products
offering discontinued
Structured Products deritrade® SIP
B2B
deritrade® MIP
B2B4C
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Growing leverage product markets: technology platform allows us to enter new markets quickly and at low marginal costs Leverage products in Europe
Growth and strong potential for Vontobel Markets Volume in EUR mn
2014
2015
D
Market share VT (volume) 2015
Market share VT (trades) 2015
2017 (E)
Switzerland1
10,876
11,097
+2%
35.8%
47.6%
Germany1
21,904
34,389
+57%
7.0%
6.3%
Nordics1 3
6,698
9,906
+48%
14.1%2
15.2%2
Italy1
20,619
26,271
+27%
0.0%
0.0%
Netherlands2
9,116
10,372
+14%
0.0%
0.0%
France2
4,990
6,296
+26%
0.0%
0.0%
74,203
98,331
+33%
7.5%
Total
Vontobel market presence Potential new markets for Vontobel Leverage Products Annualized figures based on Jan-April 2015 figures for Switzerland, Germany, Nordics, Italy Annualized figures based on Jan-March 2015 figures for Netherlands and France 3 Launched 12 January 2015 Source: Technolab, DDV, eusipa.org, ngm.se, Borsaitaliana.it, Euronext.com, Vontobel estimates 1
2
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Growing investment product markets: technology platform allows us to participate in growth Investment products in Europe
Growth and strong potential for Vontobel
Markets Volume in EUR mn
2014
20151
D
Market share VT (volume) 20151
Market share VT (trades) 20151
2017 (E)
Switzerland
11,880
15,003
+26%
13.6%
20.7%
Germany
22,348
28,068
+26%
4.2%
4.3%
Austria
0,463
0,710
+54%
n.a.
n.a.
34,691
43,781
+26%
7.4%
Total
Vontobel market presence 1
Annualized figures based on Jan-April 2015 figures for Switzerland, Germany, Austria
Source: Technolab, DDV, eusipa.org, WienerBorse.at, Vontobel estimates
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Low interest rate environment: investors need solutions to manage duration and credit risk Market conditions
Customer’s needs
Highs of stock markets (SMI/DAX/SPX)
Optimisation
«Substantial» interest rate change risk
Return
Lack of opportunities Risk
Solutions Intelligent risk transfer (asset class)
Duration management as (portfolio)
Credit risk management (portfolio)
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Low interest rate environment has positive impact on products relative attractiveness and issuer margin VT Market Share - overall
Product yield
30
LEVERAGED PRODUCTS
20
2014: 20.70% YtD1: 23.33%
10 0 Market
y
15
Ann. 2015
26.710 Mia CHF
26.662 Mia CHF
2014: 27.4% YtD1: 34.9%
5 0 Market
t Total 2014
Ann. 2015
12.744 Mia CHF
11.931 Mia CHF
PARTICIPATION
Expected return
4
t
2 Total 2014
Ann. 2015
8.127 Mia CHF
9.183 Mia CHF
Product yield
4 3 2
t
1 0
Total 2014
Ann. 2015
4.284 Mia CHF
4.043 Mia CHF
1
Product yield
0.5
t Total 2014
Ann. 2015
Market
1.209 Mia CHF
1.013 Mia CHF
Market with ref. Debtor
0.368 Mia CHF
0.494 Mia CHF
Based on Jan-Mai 2015 figures Source: technolab.ch – per 27.05.2015 1
y
1.5
0
CH Govt Bonds 5 Year Note Generic Bid Yield
CAPITAL PROTECTION WITH REF. DEBTOR AND COSI 2014: 79.59% YtD1: 89.38% 2014: 10.40% YtD1: 8.78%
y
5
Market
CH Govt Bonds 5 Year Note Generic Bid Yield
YIELD ENHANCEMENT
2014: 26.14% YtD1: 23.77%
Product yield
6
0
CH Govt Bonds 5 Year Note Generic Bid Yield
8
Market
y
10
2014: 6.09% YtD1: 6.12%
Issuer Margin
Product yield
10 Total 2014
Relative attractiveness
CH Govt Bonds 5 Year Note Generic Bid Yield
risk
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Product innovations in a low interest rate environment Product Innovation Product description p/l
Strategic Certificates Auto- / Issuer Callable (Multi) Defender VONTI
t
p/l
t
p/l
Multi VONTI with low strikes
Floored Floater with reference debtor and COSI®
t
p/l
t
Strategic Certificates Strategic Certificates on a Reference Portfolio are financial instruments that securitize a basket of underlyings (the Reference Portfolio) based on an investment strategy defined by an External Investment Manager. The asset allocation process is managed at the discretion of the Investment Manager. Auto- / Issuer Callable (Multi) Defender VONTI Investors benefit from guaranteed coupon payments. Furthermore, the callable feature facilitates engineering structures with relatively higher coupons and simultaneously lower barriers compared to traditional (Multi) Defender VONTI Multi VONTI with low strikes Investors benefit from guaranteed coupon payments. Furthermore, a low entry level and hence, a discount in case the final fixing of the worst-off underlying is below its corresponding strike level applies. This discount in combination with the paid coupons constitute a large safety buffer as they can compensate possible losses of underlying prices. Floored Floater with reference debtor and COSI® With these instruments an investor can earn attractive minimum coupons and benefit from increasing short term interest rates. The 100% capital protection depends on the solvency of the reference debtor only, therefore allowing an investor for debtor risk diversification. Due to the variable coupons the duration is lower compared to a normal bond’s duration.
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Platform innovation: technology leadership enables next-generation solution – the multi-issuer platform Multi-issuer platform represents ground-breaking technology for structured products Multi-issuer platform
Market potential
Single issuer platforms
Life cycle development
Manual 1995
2000
2005
2010
2013
deritrade® leads
KPI
Manual
Single issuer platforms
Multi-issuer platform
# issuers/platforms
~20
~6
Unique VT offering
Production costs
High
Lower
Significantly lower
Tailored offering
YES
YES
YES
Scalability
NO
YES
YES
Price competition
NO
NO
YES
Credit risk management
NO
NO
YES
Regulatory requirements
NO
NO
YES
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deritrade® Multi Issuer Platform is setting a new standard, driving rapid growth in demand from issuers and distributors Business model Standard
Cornerstones New
Issuer
Bank/ distributors
Product specialist
Client advisors End-clients structured products
deritrade® MIP
Issuers low cost distribution market reach
Cost reduction Increased market reach
deritrade® MIP connecting issuer and distributors, harmonized offering, price transparency, technology and support
Cost reduction Best execution Scalability
Client advisors multi-issuer offering, best execution, fully automated trade processing low distribution costs
Regulatory requirements addressed
End-clients tailored structured product
Investment suitability Maximize clients’ return
Vontobel deritrade® MIP is redefining the market for structured products
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Switzerland – growing a new franchise
1. Deutsche Bank 2. Morgan Stanley 3. Société Générale 4. UBS 5. Vontobel 6. ZKB 7. Undisclosed name
Distributors 28 Banks (10 out of 28)
Onboarding issuers Finishing offering Platform development
Vontobel PB Berenberg Centrum Frankfurter Bankgesellschaft Hypo Lenzburg
derivative.com
Issuers
Cooperations
LGT Neuenburger KB Rothschild Bank Schwyzer KB Zuger KB
Starting distribution
Raiffeisen UBS Wealth Management
External Asset Managers >300 External Asset Managers
Summary: Number of banks: of which cooperations External Asset Managers:
28 2 >300
Market potential: Addressable AuM1: >CHF 1,000 bn 1 Annual issues : CHF 35 bn 1 Annual secondary volume : CHF 20 bn 1
Vontobel estimates
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Live demo of technology leadership
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Questions and Answers
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Vontobel Financial Products has built strong market position in Europe and is market leader in Switzerland (1/2) Market share in Switzerland in listed products YTD April 2015 (2014) No. of trades 1. Vontobel 2. UBS 3. ZKB 4. Julius Bär 5. Commerzbank 6. Credit Suisse 7. Leonteq 8. Notenstein 9. Banque Vaudoise 10. Safra Sarasin
Turnover 42.6% (40.9%) 18.5% (19.3%) 15.8% (16.5%) 6.7% (5.7%) 6.0% (5.2%) 2.1% (3.1%) 1.9% (2.0%) 1.2% (1.1%) 0.8% (0.7%) 0.5% (0.5%)
1. UBS 2. Vontobel 3. ZKB 4. Julius Bär 5. Credit Suisse 6. Leonteq 7. Notenstein 8. Commerzbank 9. Banque Vaudoise 10. Bank Safra
No. of products issued 36.5% (34.7%) 23.0% (20.7%) 14.4% (16.9%) 8.5% (7.4%) 3.3% (5.3%) 3.2% (3.4%) 3.0% (2.3%) 2.0% (1.7%) 1.7% (1.2%) 1.2% (1.2%)
1. Vontobel 39.1% (46.4%) 2. UBS 23.2% (21.2%) 3. ZKB 10.0% (12.7%) 5.8% (5.4%) 4. Julius Bär 5.2% (4.1%) 5. Leonteq 6. Royal Bank of Scotland 3.4% (2.3%) 3.4% (2.4%) 7. Credit Suisse 3.3% (2.5%) 8. Notenstein 2.0% (0.6%) 9. Commerzbank 0.9% (0.5%) 10. HSBC
Market share in Germany in listed products YTD April 2015 (2014) No. of trades
1. Commerzbank 2. Deutsche Bank 3. Citigroup 4. DZ Bank 5. BNP Paribas 6. UBS Investment Bank 7. Vontobel 8. HSBC
22.0% (20.1%) 20.5% (27.7%) 9.6% (9.8%) 8.9% (7.8%) 7.1% (7.4%) 6.3% (6.3%) 5.9% (5.6%) 4.9% (5.2%)
Turnover
No. of products issued
1. Deutsche Bank 26.8% (27.5%) 20.2% (19.6%) 2. Commerzbank 9.3% (7.7%) 3. DZ Bank 7.0% (7.4%) 4. BNP Paribas 5. Vontobel 5.7% (4.8%) 6. HSBC 5.5% (5.1%) 7. UBS Investment Bank 5.3% (5.4%) 8. Citigroup 5.3% (5.2%)
1. Commerzbank 2. UBS 3. Deutsche Bank 4. Citigroup 5. BNP Paribas 6. DZ Bank 7. Hypovereinsbank 8. Vontobel
Source: SIX Structured Products Exchange, Technolab, EUWAX, DDV (data do not include OTC trading of listed products)
14.5% (13.6%) 11.4% (10.0%) 11.3% (13.0%) 11.1% (11.6%) 10.5% (12.1%) 8.7% (7.4%) 7.9% (6.3%) 6.7% (10.2%)
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Vontobel Financial Products has built strong market position in Europe and is market leader in Switzerland (2/2) Market share in Sweden in listed products YTD April 2015 (2014) No. of trades 1. Société Générale 2. Commerzbank 3. Vontobel 4. BNP Paribas 5. Öhmann Capital
Source: NGM.SE
No. of products issued
Turnover 63.4% (69.5%) 15.9% (14.7%) 15.2% (0.0%) 4.4% (12.9%) 1.1% (2.2%)
1. Société Générale 2. Commerzbank 3. Vontobel 4. BNP Paribas 5. Öhmann Capital
62.8% (61.9%) 15.4% (15.4%) 14.1% (0.0%) 5.3% (18.1%) 2.4% (3.6%)
1. Commerzbank 40.5% (36.3%) 2. Société Générale 25.3% (24.7%) 22.2% (26.4%) 3. BNP Paribas 4. Vontobel 5.6% (0.0%) 5. Royal Bank of Scotland 4.2% (7.6%) 2.1% (5.0%) 6. Öhmann Capital
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The Vontobel Group
