In doing so, it is looking to capitalize on the growing demand for Nordic-denominated fixed income assets from outside the region, such as from regional bank clients in Western Europe.
As part of that effort, Swedbank announced this week it has become the newest settlement member of CLS, bringing to 62 the number of financial institutions that are part of the international group.
Tomas Hedberg, global head of FX and fixed income at Swedbank, says membership in CLS means the bank can continue to grow its FX business while providing clients with an added level of security in their transactions that is crucial for leading players in the market.
In an interview with EuromoneyFXNews, Hedberg says the deterioration in asset quality across the eurozone as a result of the European debt crisis has made Swedbank’s strength in Scandinavian currencies and fixed income products -- which are now seen as a safe haven and a key source of diversification -- an important driver of its growth.
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| Tomas Hedberg, Swedbank global head of FX and fixed income: "Foreign interest in NOK- and SEK-linked products is growing ..." |
“Foreign interest in NOK- and SEK-linked products is growing,” says Hedberg. “With the type of volume growth we have seen recently, there was ample reason for us to become a direct member of CLS and create a scalable platform.”
Danske Bank, Denmark’s largest bank, tells EuromoneyFXNews it is positioning itself to provide investors with access to safe-haven Nordic products.
Danske says it is acquiring more hedge funds, private banks, regional and global banks in Scandinavia and around Europe as clients, and it is providing them with access to fixed income products tied to Scandinavian assets, bolstering its FX business along the way.
Micael Johansson, head of FX and fixed income trading at Swedbank, says the bank’s membership in CLS means the bank must further strengthen its existing relationship with Swedish and Scandi clients as well as develop new ties.
Doing so will better enable Swedbank to distribute FX and fixed-income products from the Scandi region to investors in Europe and elsewhere, says Johansson.
Hedberg says, in joining CLS, Swedbank is working to strengthen its long-standing base of business among Scandinavian clients, especially in Sweden – which accounts for 80% of the bank’s total FX flow.
Hedberg says he expects the trend of regional banks from within the Nordic market and from select locations in northwestern Europe looking to Swedbank as a specialist provider of FX into the Scandi and Baltic markets to be a driver for expansion of its existing base of business.
Swedbank also offers a wide range of products and services to customers in Estonia, Latvia and Lithuania, maintaining 7.8 million retail clients overall and around 600,000 corporate customers.
“We among many other banks try to focus more on respective core regional areas and strengths,” says Hedberg. “In that context, we continue to develop bank relationships where we can add value from our strengths in Scandinavia and Baltic markets.”
“We see an increased interest in Scandinavian currencies from international accounts, and we need to be part of that trend,” says Johansson. “This is a natural development for us in terms of the FX volumes we are doing right now.”
Johansson says the bank’s FX business is well-positioned to continue to take advantage of the strong macro-economic condition of the Scandinavian investment market.