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FX revenues jump 37% in third quarter, says Coalition

Increased FX volumes and volatility, due to the escalation of the eurozone debt crisis and fears over a global slowdown, led to much higher revenues at major FX banks in the third quarter, according to consultancy firm Coalition.


G10 FX revenues were estimated at $2.88 billion in the third quarter, a 37% rise on the same period last year. The performance helped the sector recover after a steep drop in revenues in the first half of the year, which was driven by reduced activity and tighter spreads due to growing competition.

G10 FX revenues for the first three quarters of the year were estimated to be $7.32 billion, up 3% from $7.11 billion for the same period in 2010.

Performance across all fixed income businesses, with the exception of commodities, weakened relative to 2010, with revenues down by 23% year-to-date compared with the third quarter of last year, as wider credit spreads and reduced risk appetite had a negative effect on revenues.

 FICC revenues by product for 3Q (2010-2011) - USD billions
 Source: Coaltion

Coalition estimated that for the whole of 2011, fixed income revenue will drop 27% to $72 billion. The consultancy also predicts that revenues from EM FX will account for almost half of FX revenues at major banks this year.

Coalition estimated that EM FX will account for 49% of revenues, compared with 51% cent from G10 FX this year. EM FX accounted for just 28% of revenues in 2008.

Coalition tracks the performance of the 10 largest investment banks globally; Bank of America Merrill, Barclays Capital, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, Morgan Stanley, Royal Bank of Scotland and UBS.

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