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Foreign Exchange

G10 FX revenues rise 9% in 2011, says Coalition

G10 FX revenues for the world’s leading FX banks rose 9% in 2011 from the same period a year ago, according to a report published on Wednesday by the consultancy Coalition.

Revenues rose to $9.5 billion in 2011 from $8.73 billion in 2010 for the 10-largest investment banks, according to the Coalition’s index of banks. In terms of revenues across the Fixed Income, Currencies and Commodities group, revenues fell 25% to $73 billion, largely driven by declines in credit, the report shows.

 Source: Coalition bank index

Analysts at Coalition said that competitor performance across the 10 banks was mixed, with a poor performance by a small minority of banks “adversely skewing the improvement by a majority of the index banks”.

The EMEA region continues to contribute more than 50% of global G10 revenues.

Interestingly, FX revenues have been in decline since they peaked in 2008, a condition that Coalition puts down to the adoption of electronic trading, which has compressed bid/offer spreads, while exposures to emerging markets increased relative to G10 currencies.

Nonetheless, that trend seems to have stalled this year. In recent years the mix of FX revenues between G10 FX and emerging markets FX has changed markedly. In 2010, G10 represented 56% of total FX revenues, down from 72% in 2008. That was little changed in 2011, the report said.

That has resulted in a reduction of headcounts across the 10 investment banks that Coalition tracks, and this has continued through 2011, although it notes that the reduction has been less than in other asset classes, such as credit.

The banks covered in the coalition report include Bank of America Merrill Lynch, Barclays Capital, Citi, Deutsche Bank, Goldman Sachs, JPMorgan, Morgan Stanley, Royal Bank of Scotland and UBS.

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