News - 16.05.2018 - 3 min read time

Vontobel’s Structured Products Mastermind Doing His Own Thing


Patrick Loepfe is known as co-founder of Vontobel’s Deritrade platform. Together with a partner he now has launched a platform for the issuance of structured products, as has learned.

Patrick Loepfe, who worked for Zurich-based Bank Vontobel for almost 12 years, is a mathematician by profession and the mastermind behind the bank’s Deritrade platform. At the end of 2015, he left the private bank. Now, he has teamed up with Philippe A. Naegeli(pictured below), an investment banker, who worked most recently as managing partner at U.S. merchant bank Forstmann & Co.



At the start of the year, the two bankers founded Gentwo, a fintech company that enables the securitization of bankable and non-bankable asset values. The startup, located in Zurich, is already returning a profit, they claim.

Patrick Loepfe, wherein lies the difference to other platforms for structured products, such as Deritrade at Vontobel?
Deritrade is a market place for client advisers and asset managers where you can easily create customer-tailored structured products from different issuers. The bank however remains the sole seller of the products. This is where GenTwo kicks in.

«Banks should welcome our solution»
We are breaking the traditional dependence of buyers and sellers, and provide all financial intermediaries with the infrastructure, or so-called issuance vehicles, with which they can develop and manage their own products.

In fact your business model renders banks redundant – at least as far as the emission of structured products is concerned.
That’s right. Although banks should welcome our solution, as they make unnecessary risk aggregation, and thus bloated bank balances, unnecessary.

How have the banks reacted to your platform?
Not all can handle change, and they are scared of disrupting the value-creation chain. This is understandable, but the issue also needs to be looked as a whole. For the past decade the market for financial products has moved in the direction of risk aggregation in the bank balance sheet.

«We are making the market for structured products broader and smaller-scaled»
This leads to higher costs, and the compliance and regulatory work load increases. We are working against this in that we are looking at the way we securitize financial investments in a different way. With our platform the market for structured products is broader and small scaled, along the lines of: lots of small units are safer than a few large ones. We thus contribute to solving the too-big-to-fail conundrum.

Which products can be issued through GenTwo?
Along with standard structured products are the securitization of non-bankable investments such as ships, aircraft, art or wine. Another topical issue is the structuring of cryptocoins, or tokens.

Who's your platform aimed at?
Our offer covers a range stretching from assets managers through private banks to established issuers of all financial intermediaries. GenTwo is also now able to create equality among the different players, and segregate risk.

What do you mean by «segregate»?
Instead of heaping the risk onto the bank balance we spread it among issuers. This avoids the usual administrative and compliance costs, which make products expensive and lead to intransparent fee models.

How big is the price difference?
While we charge our clients on average 20 basis points, or 0.2 percent a year, established issuers of structured products charge up to 2 percent.

The issuance vehicle’s are seen as one of the main causes of the financial crisis. Is it not risky, under this premise, to promote their use?
Basically, a issuance vehicle should be regarded as a tool, which you can utilize for good or bad purposes.

«Our issuance tools are completely transparent»
Most of the structured product issuers use the issuance vehicle abroad. Unlike GenTwo, they are not bank balance neutral.

Where exactly are the risks for the end-customer?
The financial intermediary is the key factor. If they don’t securitize and administer the investments properly then the end-customer is the one who will suffer. Our issuance instruments are completely transparent. The intermediary thus knows exactly what each structured product contains.

«We want to double our staff by the end of the year»
This transparency can – if desired – be opened to the end-customer. This isn’t possible with a bank solution. In addition, responsibility for a product can be assigned to a specific person or organization.

How many cooperation agreements have you signed since the start of the year?
So far we are working with eight intermediaries, and are negotiating with a further 14. Against this backdrop we want to double our staff from four full-time equivalents, including us two, by year-end.

Link to the Finews article

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