Germany special report

Germany Special Report

German investors have been buying and making money from structured products for so long that the financial crisis has been a mere hiatus - albeit a lengthy one - before progress returns. Give or take an active dislike of US investment banks and a renewed fascination with credit ratings, Germany's structured products market is now starting to look like its old self again.

This return to normality includes simpler products and shorter terms, though some retain a liking for capital guarantees. Appetite for safety will return in earnest once interest rates start to rise, which on current reckoning may be six months away at the earliest, and more likely a year.

A healthy appetite for leveraged, trading products remains in the wake of the crisis. Not only that, but the banks that have extended their product range beyond the usual investment-based structured products have seen money made and have dipped into this market, creating leveraged, trading businesses. A number of banks in Germany - both local and international - now have a full armoury of products to offer.

In addition to all these changes, legal developments are afoot. Proposed new rules about key investor information and the key information document offer an insight into how sensible the Germans can be. The basis for the country's domestic rules on the information and documentation associated with structured products lies in previous actions of the Consumer Protection Ministry, meaning today's model for the short-form risk-reward information required all over the world is based on the warning sheet that comes with prescription medicines. This sounds more suited to consumer protection than financial markets, but is surely all the better for that.

Contents

Market maturity keeps German structured products on track

Germany's new disclosure regime targets distributors

German providers battle for market share