BBVA expands its offer of sustainable and innovative products with the launch of financial contracts linked to thematic investment strategies. From June 4 until June 22, BBVA's retail customers in Spain can invest in a sustainable financial contract linked to an ESG investment strategy.
Financial contracts are structured products that combine two or more financial instruments to form a single structure. This is a single, indivisible package consisting of an interest rate-linked product plus one or more financial derivatives.
As of 2019, the bank offers its private customers sustainable financial contracts. The bank uses the amount obtained from customers to invest, through a portfolio of bonds and/or shares, in companies considered sustainable. Now, BBVA is going a step further and, in line with the bank's sustainability strategy, has issued an innovative financial contract linked to a sustainable thematic investment strategy designed by BBVA's quantitative investment unit, 'Quantitative Investment Strategies'.
On June 4, BBVA launched the Dual 95/5 Non-Guaranteed Index Sustainable Financial Contract. This is a structured financial instrument aimed at retail customers that provides a dual investment through a fixed and a variable tranche.
The fixed tranche represents 95% of the amount invested; at the maturity of this tranche (6 months), the customer is guaranteed the return of the amount invested plus 1.55% on this amount. The variable tranche represents the remaining 5% of the invested amount and offers the client exposure to an ESG thematic investment strategy. The return percentage and potential remuneration at maturity (3 years) of this variable tranche will be linked to the performance of the Solactive BBVA ixESG Global Leaders EUR Risk Control 6% index.
This thematic index takes a holistic ESG approach and applies an innovative and dynamic methodology in the selection of leading ESG companies. It further incorporates a risk control mechanism designed to maintain the volatility of the index at a predefined level by dynamically adjusting the index participation to a greater or lesser extent depending on realized volatility.
This new financial contract puts sustainability at the center of the investment by allocating the funds obtained to the maintenance of the portfolio of sustainable bonds and/or stocks. In addition to the sustainable nature, the variable tranche of the financial contract is linked to an index of leading global ESG companies.
The launch of the Dual 95/5 Non-Guaranteed Index Sustainable Financial Contract is possible thanks to BBVA's sustainable transactional banking framework, which makes a wide range of sustainable financial solutions available to its customers. The BBVA-designed methodology, certified by an independent international provider of environmental, social and governance (ESG) research and services for investors and public and private organizations, allows financial products linked to sustainability to also be certified as green, social or sustainable.