Investment banks have always had difficulty competing with the global commercial banks in the emerging markets for two good reasons. The first is that they aren’t large lenders to emerging markets clients; the second is that financial markets in these regions tend to be regionally and domestically driven. That has made it more challenging for investment banks to provide seamless access to those markets for their global clients in a way that allows them to compete on an equal basis.
Credit Suisse, with its respectable emerging markets franchise and large global hedge fund client base, has decided to replicate the commercial bank EM model by merging its FX division with its emerging markets fixed-income group. The idea is to create a single store front so its clients can get the full range of prices as well as information and content flow.
It’s a savvy move for the firm as revenues from emerging markets look set to make up a larger proportion of FX income in the future – as much as half the total in 2011, according to consultancy Coalition, up from about 38% in 2008.
Meaningful uplift
"We feel it’s going to be pretty meaningful revenue uplift, and it’s going to be great for clients," says Credit Suisse’s global head of FX, Todd Sandoz. He took over the role last May, having been the firm’s co-head of equities for the Americas before that.
By its own admission, Credit Suisse hadn’t been organized in a way that presented a unified product offering, creating some inconsistencies in its delivery to clients. By bringing the two together, the bank is streamlining and taking away friction and eliminating duplications and multiple pricing points from different desks, representing an improvement for both sales and for the client, it says.
"From a sales perspective, the global side of the offering will be much more geared toward broader macro delivery, where, with one call, a client can simultaneously get the full range of prices, crosses and flow of information, in addition to deep local-market content," Sandoz tells Euromoney. "It is hard to replicate this type of comprehensive offering with just a joint venture, or where FX sits within an emerging markets business."
| Ben Shooter has been appointed global head of global currencies and emerging markets. |
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As part of the merger, Sandoz has promoted one of the FX division’s top hedge fund salesmen to run the sales business of the merged entity: Ben Shooter.
Shooter has been appointed global head of global currencies and emerging markets (GCEM), and will replace Martin Weidmann, who leaves the firm. Shooter is considered a rising star at Credit Suisse, and has a strong following among some of the largest macro hedge funds in the FX markets. He will remain based in London, reporting jointly to Sandoz and Chris Corson, who will co-lead the GCEM.
Credit Suisse has been making inroads into the emerging markets in recent years. In last year’s Euromoney FX survey, it jumped three places to eighth in the market share rankings in Latin America, where Sandoz points to its Brazil business as being "best in class". It had a market share of 4.09%. It also made gains in Central and Eastern Europe, increasing its market share to almost 5% from 3.35% in 2010 while improving three places to seventh in the overall rankings. In Asia, it was less impressive however, falling five places to 15th, as its market share fell to 1.97% from 2.88%.
This article was originally published by EuromoneyFXNews.