Investec continues to cut back in retail structured products
JOHANNESBURG - INVESTEC said yesterday that it would stop issuing retail-structured products in the UK after last year, signalling it would cut back its business in the asset class.
Structured products typically offer investors a return linked to the performance of an underlying asset, such as equities, commodities or interest rates.
Investec, one of the biggest issuers of retail-structured products in the UK, said in November that it planned to wind down the issuance of some structured products after reporting high costs related to hedging on some instruments.
While it said it no longer had the appetite for this kind of risk, it was not clear at the time which products exactly it would exit.
“From April 2021, Investec Bank plc will not launch any further retail structured product plans in the UK retail market,” it said in a statement yesterday, adding it would issue one final tranche later this month.
Existing plans would not be affected and Investec would continue to manage these until their maturity, it said. It said its decision reflected a shift into other core services.
The bank has reported £82 million (R1.67 billion) in hedging costs related to derivatives attached to some of its structured products since May 2020, and has warned it will incur at least another £53m, with costs reducing after that.
Investec has particularly dominated issuance of a specific instrument called a structured deposit in the UK, according to a review by financial adviser Lowes.