Structured - BNP Paribas

Scandinavia Netherlands Scandinavia VOLUMES & KEY PLAYERSVolumes were higher than the previous year’s, with totalissuance in 2004 estimated at e7bn: people actually increasedpersonal investments after the invasion of Iraq. The main issuerswere still Handelsbanken, Swedbank, Nordea, SEB and DNB.PRODUCTS & STRUCTURESThe most successful options were the Twister and the CaptiBonus, owing to their short maturity and potentially highcoupon payout. Most structures were capital guaranteed, witha global or European focus on the underlying.Besides, short-term capital guaranteed equity linked productshad increased competition from pure currency linked pay-offsin the first quarter of the year.N.B.: A change in guidelines in Norway in 2003 required thatissuers disclose commissions made on the products. This has nothad an impact on volumes but it has put margins under somepressure. There was no significant tax or regulation changeliable to impact business in 2004 otherwise.Alternative investments such as CPPI, ODB and hybrids had asmall role in retail products in 2004. Investors looking fororiginal features were more interested in forex, raw materials orshare indices in emerging markets where potential returns wereseen higher. As current hedge fund performance disappoints,the focus is now mainly on mutual funds. Lately, investors haveshown more and more interest for high potential stock basketsfrom developed economies rather than emerging markets.Examples of successful product issues in ScandinaviaNetwork N/A N/A N/AProduct launch April 2004 August 2004 November 2004Size of deal N/A N/A EUR 60mnProduct name Twister Coupon Driver GalaxyProduct type Deposit Note Deposit Note Deposit NoteProduct maturity 2 years 5 years 3 yearsUnderlyings OMX or Eurostoxx Basket of stocks from Asia, Europe,USA and Eastern EuropeBasket of stocks Dow JonesGlobal TitansCapital protection 100% 100% 100% + 2% minimum guaranteeProduct descriptionStructure pays a high coupon minusthe monthly negative performancesStructure sets the performance ofthe best shares to a high fixedcoupon, thereby locking in a goodperformance on parts of the basketAdvertising Yes Yes YesReason forlaunching productCommentsProduct was popular and easyto sellPerformance on early products wasvery good, declined a little bit laterProduct was innovative in themarketStructure pays the absolute valueof the least performing shareProduct was new in the market andgot a favourable reception9