Many banks have been forced out of Euro-commercial paper recently. With margins thin, large volumes are a prerequisite of profit. The prospect of European monetary union has, however, led to rapid market growth. This year SBC Warburg managed to raise market share to 27% of total outstandings. SBC Warburg attributes much of its success to the use of electronic trading in its spot and forward foreign exchange operations, which in turn has enhanced its capabilities in synthetic Euro-commercial paper.
A diverse commercial paper capability is important because it is the cheapest way to raise funds across currencies. This is a basic service which the bank then hopes to build on at a later date with mandates for more complex and lucrative services. So SBC Warburg has made a smart strategic move by branching out into different currencies - Euro-commercial paper is traded in 19 OECD currencies and four non-OECD currencies while other banks are stuck trading in niches.
In the coming year SBC Warburg plans to concentrate its efforts on emerging markets, having negotiated mandates to establish programmes for a number of eastern European borrowers.
Top tier Citibank With 165 active programmes and a continually strong franchise in the currency markets, Citibank remains a formidable force in the ECP business.