Structured - BNP Paribas

Austria Germany Austria Central & Eastern Europe VOLUMES & KEY PLAYERSIn 2004, about e1.5bn in structured products were marketed inAustria, with the main issuers being Erste Bank, OEVAG andRCB.PRODUCTS & STRUCTURESSince Austrian investors have been pessimistic about the equitymarkets, income products were predominant in 2004. As inGermany, the most popular structures were coupon structuresand options including early redemption features, with mostproducts still offering full capital protection. Sherpa, Cappuccinoand Predator were also successful there. In 2005, the most popularpay-off so far was the Lookback, mainly due to low volatility levels.Options with single underlyings predominantly are based on theEurostoxx 50, although there is increasing interest in Centraland Eastern European (Hungarian, Polish and Czech) and Asian(ex-Japan) indices. Furthermore, a strong demand from Austrianinvestors for hedge fund underlyings has been observed recently.PRIVATE BANKING MARKETProducts sold in the Austrian private banking segment mostlyresemble those marketed in Germany. However, correlationproducts are based on index baskets rather than stock baskets.As in the case of the retail side, auto-callable structures such asAthenas are less popular in Austria.Investors in Austria showed little interest in partial guaranteestructures with target redemption features, mainly for tax reasons.The average maturity is 6.5 years.As far as new trends are concerned, for 2005 there appears tobe increasing demand for fund-linked products as well as purecommodity structures.Examples of successful product issues in AustriaNetwork N/A N/AProduct launch February 2004 February 2004Size of deal EUR 10mn EUR 7mnProduct name Blue Fox 5 Bond Garantieanleihe 10% plusProduct type Deposit Note Deposit noteProduct maturity 8 years 5 yearsUnderlyings Basket of 25 international blue chips Basket of 3 indices equallyweighted: SX5E, SPX, TPXCapital protection 100% 100%Product descriptionAnnual couponYear 1: 8% fixed couponYear 2-8: 10% coupon of notionalamount if no stock hits the barrieron any observation date (Barrier70%); otherwise 0%Snowball feature (year 2-8):Previously missed coupons arepaid on the first coupon paymentdate where the high coupon ispaid again110% of notional + premiumPremium= notional * 40% ofaverage out against average inperformanceAverage out = average closingperformance of three indices at13 dates each taken in the last 13months of the productAverage in = average closingperformance of three indices at7 dates each taken in the first 7months of the productReason forlaunching productSuccessful previous productsTrendy product with very goodretail audience11