US bank securities with safety buffer

Viewpoint

The US banking sector posted very strong results in the first quarter of 2021. This was primarily driven by three factors: increases in investment banking, liquidation of credit reserves and the increase in US interest rates. But since then, it is precisely in interest rates that we have observed stagnation. This explains the muted response of the market, despite the positive first quarter results. Net interest revenue declined, which in turn slowed credit growth.

So on the other side of the pond, we are still a long way from banking euphoria, preferring a largely defensive investment approach. For investors who are interested in dipping a toe in US banks, one promising option is the Barrier Reverse Convertible (BRC). The assurance of a return in the form of a guaranteed coupon means that any price setbacks in the instrument are absorbed by the safety buffer. This has led to the following product idea – with Citibank, J.P. Morgan and Goldman Sachs as underlying assets:

 

 

All details are indicative and are based on a product simulation carried out on April 21, 2021. As an investor, once you break through the safety barrier you are subject to the performance of the underlying value.

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