How is the equity finance business at Natixis organised?
Natixis is the international corporate, investment, insurance and financial services arm of Groupe BPCE, the second-largest banking group in France.
With our strong credit rating and balance sheet, a global network and a highly visible brand, we are expanding our global footprint in equity finance.
Under the leadership of Regis Lavergne, global head of equity finance at Natixis, we are a team of 40, with offices in New York, Paris, London, Frankfurt, Hong Kong and Tokyo.
We are organised into three global, transversal equity financing product groups: securities lending, forward trading, and collateral trading. This allows us to price dynamically and propose solutions that differentiate us in the market.
We have fully integrated the long-term financing and derivative expertise of our forward trading team with the liquidity and financing capabilities of our securities lending and collateral trading groups.
I head the client strategies group globally, which has teams in Europe, Asia and the Americas. We partner with our key global clients to structure strategies tailored to their equity financing needs.
Whether for outperformance purposes, portfolio enhancement, or leverage and financing, we focus on optimisation of scarce resources, through the alignment of our clients’ and of our own interests.
Cultivating long-term, mutually beneficial relationships is at the forefront of our mandate.
How would you define the equity finance brand of Natixis?
We deliver custom, bespoke solutions to our clients, who include asset managers, insurance companies, hedge funds, pension plans, mutual funds, and corporates, as well as banks and dealers.
We pride ourselves on being innovative within our product range, and are committed to providing creative and elegant solutions for our clients.
Can you give some examples of the Natixis product offering?
The wide range of solutions that we offer is focused entirely on serving our clients’ needs, regardless of the region or underlying currency
Through securities lending, we provide a mechanism for optimisation of embedded asset repo levels; through forward trading, we enable a hedging mechanism to facilitate outperformance; and through collateral trading, we offer products to address a client’s balance sheet, liquidity coverage ratio (LCR) or regulatory reserve requirements.
Natixis recently launched a synthetic prime product called Natixis Synthetic Services that embeds market access, execution, leverage and financing, in a dynamic portfolio swap format. This product grants our clients full exposure to the depth of our global securities lending inventory.
Our expertise in insurance solutions provides creative strategies to address the regulatory reserve requirements of this client segment.
From a cash management perspective, we offer an opportunity for clients to extract additional yield on their excess liquidity via our protected asset programme. Regardless of the client’s needs, we can tailor the right solution.
To what extent is equity finance a different business today?
This business very much continues to evolve. When I joined the firm in 2005, at the inception of the equity finance business in New York, the landscape was entirely different. We have seen material shifts in our needs, and those of our clients.
Íø±¬³Ô¹Ï lending has changed from merely a tool to facilitate short coverage and monetisation of assets, to one that can also offer LCR and regulatory relief. This is, while very challenging, a great opportunity for us to deliver value-added solutions to our clients.
How have regulations changed equity finance?
They have definitely altered the profile of our flows and the product offering. We pride ourselves on addressing these changes in this landscape, and structuring products and ideas that anticipate those to come. For example, the upgrade/downgrade trade has become very prevalent in the Americas today, following the lead of the European markets.
This structure is at the forefront of securities lending transactions—with the potential to provide benefits in both balance sheet and LCR, while embedding long and short liquidity. There is also a continued push towards central counterparties, to mitigate credit risk and provide balance sheet relief.
At Natixis, we participate in central counterparty (CCP) structures both in the US and in Europe—we were the first French bank to go live on the Eurex Lending CCP.
Going forwards, what do you think the next big change will be to equity financing?
The regulatory environment will undoubtedly continue to create hurdles for our business. What is clear is that our clients and the marketplace are recognising the importance of equity financing products as a mechanism to structure solutions for the next, great challenge.
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