Deutsche Bank
It is rare to find two institutions as closely matched as UBS and Deutsche Bank are in foreign exchange.
According to the results of Euromoney?s 2004 foreign exchange poll, published in May, the two banks handle almost identical amounts of dealer-to-client volumes globally. From the 3,500 poll responses, and the $24 trillion in annual FX turnover that these respondents transact, UBS has a market share of 12.36% and Deutsche Bank 12.18%. As we noted in May, in an environment where large FX-dedicated hedge funds are becoming more commonplace, that kind of difference – $40 billion ? can come down to a single vote.
So putting those overall volumes and market shares to one side, this award goes to Deutsche Bank for several key reasons. For the first time, it is the number one bank for institutional investors, taking that position from UBS. It remains by far the largest FX counterparty for hedge funds. And it is ranked second for corporates, behind Citigroup, and second in the fast-growing client base of banks, behind UBS. No other bank is ranked first or second in every main client group.
That kind of high-quality service for such a diverse client base is not easy to offer but Jim Turley, the bank?s global head of FX and commodities, feels it is important. ?I don?t think you are a wholesale foreign exchange player if you don?t have something for everybody,? he says.
The other main advantage in Deutsche Bank?s favour is the dominance it has among the very largest clients. It is the biggest counterparty in terms of volumes for clients with requirements in excess of $25 billion and $100 billion. In part, that presence with big clients came from the practicalities of building an FX business essentially from scratch around five years ago. ?It certainly was the strategy a long time ago,? says Turley. ?We have got to use our resources as efficiently as we can, and from there the relationships have grown very well.?
Crucially, though, large clients clearly value highly the research and advisory services they get from Deutsche Bank. Looking closely at the results of Euromoney?s poll, the larger the clients get, the more often Deutsche Bank appears at the top of the qualitative rankings. The very biggest clients voted for the bank as the best in quantitative research, economic fundamental research, options and volatility research, accountancy advice and derivatives, and a range of other key areas.
Deutsche Bank is thinking carefully about its partnerships with key clients. Where a bank is offering a client privileged access to the very best trading technology, research, and indeed prices in the market, it needs some assurance that it is going to get a decent proportion of that client?s business. No sensible bank can pour resources into providing this kind of service for little benefit. ?We have a big group under Rashid Hoosenally and Rhom Ram that targets not just the big clients, but their job is to go out and understand what these clients do and how they run their businesses,? says Turley. ?We don?t just guess and we are not trying to sell them something immediately. There is a risk with that, because it may not pay off, or it may take a long time.?
Working out how to cater for clients on that basis demands lots of new ideas from the bank?s staff. It helps this through the scarily named ministry of innovation, which in fact is just a formalized structure to encourage and assess new ideas. ?It has got more people involved and it has broken down people?s inhibitions,? says Turley. ?No-one gets laughed at.?
