Spotlight: European banks trigger early redemptions in France

The European banking sector performance has been a standout driver of successful early redemptions of structured products (autocalls) for the best of Q1 2023 in France, according to SRP data.

With banks set to end the quarter about flat following the sector turmoil, early matured products linked to banking indices represented more than a fifth of the redeemed notional in France year to date. Additionally, products linked to the performance of shares of French banks accounted for a further three percent of the approximately €2 billion released for reinvestment in what has been an improving quarter for autocalls in terms of rollover money.

Three quarters of the products expired were linked to a single index, with products linked to a broad benchmark index, a bank index and an ESG index being the main drivers, in terms of released notional.

Products linked to bank indices took the lion’s share in terms of number of early redemptions with eighty-four products out of 350 captured by SRP.

New products linked to banking indices in France accounted for an estimated nine percent of the index-linked notional which represents 47% of the total traded notional since the beginning of 2023.

As the quarter comes to an end, new issuance shows a cautious revisiting of banking indices with investors presumably seeking to benefit from the high volatility of the index, which allows to create products with better potential returns and higher protection.