UniCredit remains dominant despite increased competition

UniCredit achieved its goals in Italy in 2022 after a strong year. The bank placed more than €2.6 billion (US$2.8 billion) in structured products while increasing the volume placed with its distributor partners by 73% year-on-year, further cementing its leadership as an issuer of structured products in the Italian market.

Italiana Certificati e Prodotti d'Investimento (Italian Association of Certificates and Investment Products – Acepi), the volume of structured products placed in Italy has seen a 5.4fold increase over the past decade: from €2.5 billion in 2012, to more than €16 billion in 2022.

“Naturally, this growth has attracted all the major European and American houses […] the consequence being that the choice of issuers in Italy has widened, and the competition intensified,” Albano said.

tenor linked to both inflation and the equity market.”

The product pays an annual coupon equal to 120% of the European inflation (Eurozone HICP ex Tobacco) while at maturity, if the Eurostoxx Banks Index stays above a barrier of 41.38 points, the investor will receive 100% of the initial investment.

“For context, today the index sits around 100 index points,” Albano said.

The bank’s strengths continue to lie in its proximity to clients, according to Roberto Albano (pictured), its head of investment products distribution southern Europe.

“The pre- and post-phase of any deal, the marketing support, and the depth of our product platform, as we offer capital-protected as well as conditional capital-protected and autocallable products,” he said.

“These are important, as any potential partner knows that with UniCredit they have access to payoffs and underlyings that fit any market context.”

According to the Associazione

SRP data shows that last year, 21 issuer groups were active in the Italian market, including Intesa Sanpaolo, BNP Paribas, Société Générale, Leonteq, UBS, Citi and Goldman Sachs.

One of UniCredit’s highlights for last year was a three-year Cash Collect Certificate linked to the Eurostat Eurozone HICP ex Tobacco Unrevised Series NSA and the Eurostoxx Banks Index.

“We always want to be reactive around clients’ needs,” said Albano. “When we first saw signals that inflation was rising in June 2022, we designed a hybrid structured note with a three-year

For the remainder of 2023 and beyond, Albano believes clients will profit from the various bouts of volatility that he expects to see over the course of the year.

“To this end, autocallables on stocks and indices should still be very popular.

“We may also see an increase in capital-protected products – with the market growing from €3 billion to €11 billion over the course of last year. This was primarily due to the uncertain geopolitical environment and rate pickup supporting protected structured products,” Albano concluded.

The SRP Italy database registers 100 structured products issued by UniCredit with a strike date in 2023 to date.

DDV: German certificates outperform underlyings

Sixty-two percent of discount certificates generated a positive return in 2022, according to a report commissioned by the German Derivatives Association (Deutscher Derivate Verband – DDV).

“The success of discount certificates is based on the ease with which they can be intuitively understood,” he said.

Investors buying a discount certificate get a price discount on the underlying asset, which acts as a buffer if the price of the underlying asset falls. In exchange for this discount, investors accept that they will only participate in the performance of the underlying asset up to the level of the cap.

“This creates a more defensive risk/reward profile than a direct investment in the underlying,” said Vollmuth.

DDV study. “A comparison of the last two years on stock markets indicates that 2021 was a bull market, initially characterised by strongly rising prices, which stagnated at a high level from autumn onwards.

“In this environment, very many instruments – underlyings as well as discount certificates – generated positive returns. The risk buffers were rarely used, which can also be seen in the fact that ‘only’ 41% of discount certificates outperformed their underlyings in 2021,” said Vollmuth.

The study, which was conducted on behalf of the DDV by TTMzero in collaboration with the Stuttgart Stock Exchange, examined 173,151 discount certificates on the top 70 underlyings from Germany, Europe and the US, including five indices and 65 stocks.

Overall, almost 62% of the discount certificates examined generated a positive return against 39% for the respective underlyings. Some 67% of the discount certificates outperformed their underlying assets in the relevant period while 24.2% achieved a positive return, despite a negative performance of the underlying.

Discount certificates are among the oldest and most popular types of structured product in Germany, according to Christian Vollmuth (pictured), CEO and member of the board at the DDV.

With more than 150,000 products on offer, discount certificates represent over 40% of the structured investment products open to investment in Germany. The range currently includes more than 560 underlyings in the asset classes of equities, indices, and commodities.

“The wide range of caps and maturities makes it easy to integrate nuanced strategies into personal portfolios,” said Vollmuth, adding that whereas investors in equities are always dependent on rising prices to generate returns, defensive and market-neutral approaches are often chosen for discount certificates.

Although discount certificates performed well in 2022, their performance was not as good as in 2021 when 83% provided a positive return, according to last year’s

The bear market of 2022 was quite different. “Here, the highs right at the beginning of the year were followed by a volatile downward trend before some of the losses were recovered from autumn on,” Vollmuth said.

“In this environment, fewer certificates and underlyings generated positive returns, but discount certificates were able to demonstrate their strengths: some 67% of the products outperformed their underlyings.”

The average annual return of all discount certificates analysed in the period under review was -3.8% pa, whereas that of the underlyings was -10.1% pa on average. Of the 67,986 certificates maturing in 2022 (39.3% of all analysed products), 49.6% attained their maximum return which was on average 7% pa.