FX comment: Lloyds gets form for Euromoney FX survey
One of the most fundamental questions that this year’s Euromoney survey will answer is the extent to which market share is falling into the hands of a few banks.
Last year the combined share of the top three banks (Deutsche, UBS and Barclays Capital) was 40.44%, a decline of more than 5% from the previous two years. It wasn’t just the remainder of the top 10 that was catching up (market share of this group increased 3% over 2009), but the market share of those in 11th to 20th places also increased by around 3%. There the competition for share seemed to end. Perhaps the most telling statistic was that the top 20 banks had more that 90% of the market in each of the last four years.
It used to be a common belief that share would gravitate to a few technologically advanced flow-monsters but last year’s results showed some reversal of that process. Additionally, it is difficult to see the top 20 improving further on its 90% slice of the pie. Will this year’s poll see banks outside the top 20 claw back some market share?
We have seen recognition by banks of the value of the FX franchise. FX was seen to have withstood the chaos of the crisis remarkably well in terms of liquidity, as well as consistency of profit. Such recognition was reflected in greater investment both in personnel – data from Simon Head at CorrelateSearch shows FX-related hirings were up more than 40% in 2010 over 2009 – and technology.