THERE HAVE BEEN some significant winners and losers in this year’s Euromoney foreign exchange poll. Astonishingly, Deutsche Bank has further consolidated its position as the top dog of the foreign exchange market, increasing its overall share to 21.7% from 19.3% in 2007.
Not surprisingly, Deutsche’s global head of FX, Zar Amrolia, waxes lyrical about the bank’s further success. "We won for the first time in 2000 and that was probably a goal in its own right. The goal now is to consistently innovate and add value to clients: whether it’s new ways for order management on our electronic platform, or intelligently managing risk with derivatives or even creating benchmark indices for currencies, we challenge the status quo."
The other big winner in the top five is Barclays Capital, which has moved up to third spot from fifth. "When Barclays Capital began its build-out of its FX business, we recognized that a ‘me too’ strategy would not differentiate us in the market. We believed that innovation rather than replication was the key to success and that by providing clients with leading-edge solutions and a market-leading e-commerce platform on which to trade, we could build a market-leading brand that would ultimately attract market share. Our move up the Euromoney poll rankings in seven out of the last eight years is testament to the success of this strategy," says Ivan Ritossa, Barcap’s head of global markets – trading, Asia Pacific, and global head of FX and prime services.
The two losers – if you can call them that when they remain so clearly among the top five FX megabanks – are Citi, which has fallen out of the top three for the first time ever, and RBS. Both banks’ market share contracted but to an extent this will have been compensated for by the fact that the reported turnover in this year’s poll, $175 trillion, was the highest ever. So Citi and RBS can point out that they managed to attract more flow – it is just that their main competitors did so more successfully.
UBS’s FX business line appears to have isolated itself from the debacles that have plagued the bank elsewhere. UBS more than successfully clung on to its second spot in the poll and actually increased its market share. The bank continues to attract huge flow from what used to be called correspondent banks – almost a third of its reported turnover stemmed from this market segment.
The overall market share of the top five comes in at 61.4%, just a fraction higher than the 60.7% reported in 2007. Could it be that the consolidation of the market into the hands of a few players is finally slowing? If yes, it should encourage the rest of the pack to do what Barclays and, before it, Deutsche have done.
Bank of America is a big loser, slumping from sixth to 11th. The FX market buzzed all year with rumours about problems at BoA and it shed many staff, including Chris Mandell, its head of currencies and local markets and head of sales for global rates, currencies and commodities. Mandell was very much associated with BoA’s previously successful climb up the poll rankings. The market loves to kick a bank when it’s down, but it might well prove premature if it writes BoA off as a has-been. Richie Prager, the bank’s head of global rates, currencies and commodities, is adamant that it remains committed to FX. "FX always has been and remains a core product offering for Bank of America. It touches all of our major client segments – corporate, consumer, commercial, institutional and wealth management – and we are well positioned to continue gaining market share....We as an institution continue to manage through the storm and to invest in our growth so as to prosper when financial and economic conditions become more friendly," he says.
There is far more to FX than the just the top 10 or 20 in the Euromoney poll and there has been some interesting movement lower down the rankings. It could be argued that to double market share, as Fortis has, is easy if the starting base is low. Fortis rose from 35th to 26th. Bear Stearns was also a strong riser, climbing from 45th to 35th, which suggests there was at least one thing the bank was doing right.
Santander is another impressive riser, climbing from a lowly 68th spot to 34th. Given its size, Santander’s failure to feature more prominently in previous polls is one of its few genuine anomalies. The Spanish bank will be worth keeping an eye on in future editions of the poll.