We are often asked to compile a league table of banks based on their FX earnings. It’s a great idea but an impossible task because most banks don’t separate out their FX profitability.
One that provides a bit more clarity than most is State Street. It details what it calls its trading services revenue, “which includes foreign exchange trading revenue and brokerage and other fees”. This came in at $270 million in Q4 in 2009, virtually unchanged on Q3, but down 35% on Q4 of 2008.
The headline decline probably isn’t that surprising, given the volatility in the aftermath of Lehman’s collapse. However, the bank adds: “The 57% decrease in foreign exchange revenue is primarily due to lower volatility and lower volumes.”
I wonder if other banks have seen such a large drop? Or is State Street’s fall off attributable to the State of California’s decision to sue it over its level of service?