BNP Paribas led the pack this year in providing structured products linked to fixed income largely due to two words: risk management. Unlike many competitors who depend on individual booking centres throughout various countries and regions, BNP Paribas made a conscious decision to unify its books globally. The ability to monitor a gargantuan amount of flow data and manage risk at the global level has led to BNP Paribas’ ability to assume a greater amount of risk, and the initiative has consequently come to fruition in Asia’s private banking industry this year.
Despite wariness posed by a consensus view on rising rates and a mid-year sell-off in bonds, clients continued to show interest in fixed income investing, albeit at a slower pace as compared to 2012. On the other hand, credit spreads tightened and clients began to show reluctance on taking on additional credit risk, particularly from longer-dated products. In spite of this, BNP Paribas was able to launch new structures linked to both rates and credit in lines with client views and leverage its ability to manage risk with ever more precision based on flow insights from its global book.
“We have an integrated trading platform and this gives us a strong capability especially in terms of managing delta across different time zones,” said Cedric Podevin, Head of Fixed Income Structuring, Asia Pacific ex Japan. “And because of this, we are able to customise our products to a wide range of risk appetite to cater to our clients’ needs, including illiquid credit from esoteric markets like Latin America.”
One highlight Podevin elaborates on is very large notional ringgit-denominated credit-linked structured products. Despite the ringgit being relatively less liquid compared to traditionally traded currencies, BNP Paribas’ units across the globe from
Paris to Kuala Lumpur was able to share and leverage the strength of systems and infrastructure to book deals onshore.
With a clear understanding of the value of access to information backed by systems and infrastructure to manage risks at a global level, BNP Paribas has emerged as a bank willing to take the other side of the bet when other parties shied away, sometimes even from trading internally with their own private bank. Reaching for new highs while others were treading water, Asian Private Banker congratulates BNP Paribas as the worthy winner of Best Provider of Credit-Linked Structured Products.