In an interview with the FiX’s parent publication Euromoney, HSBC’s global head of markets Samir Assaf sets out his plans to increase HSBC’s share of the institutional foreign exchange business.
Here’s an extract of the article, which is written by Euromoney’s Peter Lee:
The bank pulled in revenue of $3 billion in FX in 2009 (having achieved $3.8 billion in 2008), which, as far as it is possible to read through other banks’ breakdowns of their FICC revenues, makes HSBC one of the largest FX banks in the world when wholesale and retail businesses are combined.
HSBC does well in FX with corporations. “Real clients who want to do big strategic $500 million and $1 billion trades, especially in emerging market currencies, know they can come to us for price and execution,” claims Samir Assaf, head of global markets. But HSBC does comparatively poorly with financial institutions. Assaf is keen to put this right and fix a hole in the bank’s signature trading business, which he claims is strong in sterling, euro and most emerging market currencies (with the exception only of some eastern European currencies).
“The FX revenue figures we publish are net of the share paid back to our retail banks, not gross,” says Assaf. “We reckon we are already top three in FX based on revenues. Yet we see that we can still do much more with financial institutions by building our presence in two key areas, namely electronic distribution and FX prime services.” The bank is investing in both. It plans to beta test a new FX prime brokerage offering with select clients starting this May, with a full-scale roll out due in 2011.
Assaf says HSBC is also investing to upgrade its electronic platform to compete more seriously with the established e-FX leaders such as UBS and Deutsche. It’s an ambitious goal. The bank processes somewhere around 60,000 FX trades a day, while the leaders in electronic FX, which have developed relations with the big financial-institution clients executing programme trades and algorithms, do five times that many.
“We are investing several tens of millions in e-FX,” says Assaf. “We always fix market share and market profile targets for our business and we want to improve our position in the Euromoney poll.”