Corporates weigh up size vs variety in FX bank counterparties
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Foreign Exchange

Corporates weigh up size vs variety in FX bank counterparties

Despite suggestions that corporates in North America are keen to work with a wider variety of FX counterparties, global banks are relaxed about the potential impact of March’s banking crisis on this lucrative business line.

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A survey of 252 CFOs, treasurers and senior finance decision-makers in North America mid-sized corporates conducted on behalf of FX-as-a-service provider MillTechFX in May hinted at trouble ahead for the major FX banks.

The headline finding was that the vast majority (88%) of the corporates surveyed were looking to diversify their FX counterparties, concerned by the potential risks associated with having only one or two banking partners in the wake of the problems experienced by Silicon Valley Bank, First Republic Bank and Signature Bank.

Julie Ros, strategic adviser to the Foreign Exchange Professionals Association, acknowledges that there are pros and cons of working with a small number of banks, with the benefits of having fewer ‘mouths to feed’ and relationships to keep up having to be balanced against reduced competition when bidding out FX trades and fewer opportunities for research and other banking resources.

For those with the largest FX wallets, it is not uncommon to trade FX and related services with as many as 50 separate financial institutions
Richard King, Bank of America
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“Clients who limit their banking partners benefit from not having to manage and divide their finite FX wallet across numerous counterparties, and in doing so they also become more comfortable asking for analysis, advice and bespoke content,” suggests Scott Sinawi, head of corporate sales, global markets Americas at BNP Paribas.


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