Euromoney Awards for Excellence 2006
Global Best Bank I Global Best Investment Bank I Global Best M&A house I Global Best investment-grade debt house I Global Best leveraged finance house I Global Best ABS house I Global Best project finance house I Global: Best equity house I Global Best equity-linked house I Global Best structured product house I Global Best risk management house I Global Best commodities house I Global Best credit derivatives house I Global Best CDO house I Global Best foreign exchange house I Global Best cash management house I Global Best investor services house I Global Best private bank I Global Best private equity house I Global Best hedge fund manager
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Also shortlisted in this category: Citigroup Deutsche Bank |
The level of service generally provided by the major FX banks is astonishingly good. This is true not only for the big players who feature in the top 10 of the Euromoney foreign exchange poll but also for many of the niche players farther down the order.
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“When you’re competing for clients’ desk space, you have to be better” Ivan Ritossa |
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Quite simply, clients have never had it so good. FX is extremely transparent – even options are no longer opaque and objects of mystery – spot and forward spreads are non-existent, research is excellent and the banks will advise on anything they see as adding value, such as trade and hedging ideas, how to generate alpha, and compliance with derivative accounting standards, such as FAS 133 and IAS 39. The old saying has it that a good big ’un will always beat a good little ’un. But even though FX is a competitive and at times aggressive business, it is not a boxing match. So size, although an important consideration, is not the only criterion this award is based on.
Three banks – Deutsche, Citigroup and Barclays Capital – make up this year’s shortlist. In terms of market share, Deutsche is streets ahead of the other two, and there is also clear distance between Citi and Barclays. So it is likely to come as a surprise to many that Barclays gets this year’s best foreign exchange house award.
Although Deutsche remains absolutely committed to hanging on to its position as the leader in terms of market share, few would disagree that when it comes to innovation and commitment, its competitors are snapping hard at its heels.
As for Citigroup, in many ways it should absolutely dominate this category. As Jeff Feig, the bank’s global head of foreign exchange, says: “We have a big footprint and the challenge for us is to take advantage of it.” But he admits that in the past the bank lost market share because of under-investment in its FX business. Citi looks like the boxing heavyweight who has been slapped by a smaller opponent but it is now seriously fighting back. It will certainly be one of the banks to watch through 2006.
Barclays gets the award for consistently punching above its weight over the past few years. It has successfully reinvented itself into a genuine contender and in the process has unveiled a series of innovative measures. Some of its competitors have been quick at times to dismiss these as puff, marketing or gimmicks. The fact that many of them are being copied suggests otherwise.
“Back in 2001, we weren’t in the Euromoney top 10,” says Ivan Ritossa, head of foreign exchange at Barclays. “People didn’t look at us as a major FX bank. We just weren’t seen as relevant in the market. Now we’re number four in the Euromoney poll and we’re the only bank in the top 20 that’s gone up every year in the last five years. We’ve done that in a consolidating environment where the big are getting bigger.
“When you’re not in the top 10 and the big banks are getting bigger, just adopting a ‘me-too’ strategy, where you emulate what they are doing, will take too long and probably not work. We had to be innovative and that’s what we’ve done,” he adds.
The bank’s Barx trading platform has carved out an extremely good reputation, and Barclays has added features and functionality to it consistently. In 2005, it came up with the idea of precision pricing and, more recently, it added streaming option prices. Others might claim these as pure puff but Ritossa says they have proved popular with clients. Looking ahead, Barclays believes that clients will want to trade increasingly across assets. Its early adoption of the Fix protocol has perhaps given it a bit of a leg-up in making this a reality for them.
“One of our big competitive advantages is the fact that we don’t have rigid silos. We use a lot of the same technology across different assets. It’s pretty powerful for us. When you’re competing for clients’ desk space, you have to be better,” says Ritossa.
For the moment, there is no discernible reason to suggest that the FX business will not keep growing. Undoubtedly, the big banks are well positioned to dominate, but Barclays has shown that you do not have to be the biggest to be the best. As with anything, the key is to know your audience and deliver what they want in the manner they want it. And that should provide hope to many of the houses that at the moment might be considered niche players.
Global Best Bank I Global Best Investment Bank I Global Best M&A house I Global Best investment-grade debt house I Global Best leveraged finance house I Global Best ABS house I Global Best project finance house I Global: Best equity house I Global Best equity-linked house I Global Best structured product house I Global Best risk management house I Global Best commodities house I Global Best credit derivatives house I Global Best CDO house I Global Best foreign exchange house I Global Best cash management house I Global Best investor services house I Global Best private bank I Global Best private equity house I Global Best hedge fund manager
