HSBC, Europe’s largest bank, said FX revenues rose above $3 billion for the first time since 2008, as client activity outside of Europe grew and the bank became more effective at managing FX risk. The bank said in its annual report that market volatility during 2011, caused by geopolitical tensions, eurozone concerns and interventions by central banks, resulted in an improved trading environment for foreign exchange compared with 2010.
HSBC said a stronger performance in Hong Kong, the rest of Asia-Pacific, North America and Latin America drove FX revenues up 18.9% to $3,272 billion in 2011 from $2.752 billion in 2010. Adjusting for currency movements, the bank said revenues were up 16%.
The bank added that revenues were also helped by continued investment in e-trading connectivity, particularly in the way it distributes the pricing of FX products via application programming interfaces (APIs) to reach more customers and by revamping its risk-management systems. That helped electronic volumes rise 43% in 2011, the bank said.
HSBC said the first phase of its new single-dealer platform is complete and is live internally in Hong Kong, Dubai, London, Toronto and New York. Meanwhile, Get Rate, which provides customers with live dealable prices, is now available in 11 countries through various channels.
Meanwhile, profits at HSBC’s investment bank dropped 24% to $7 billion, due to much lower credit and rates trading revenues in Europe.
Reports suggested that HSBC laid off as many as 10 people in its FX division last year as part of a global plan to cut costs by $2.5 billion to $3.35 billion by the end of 2013, which includes eliminating 30,000 jobs globally.
HSBC climbed one place to sixth in the Euromoney FX poll in 2011, which took account of 2010, with an overall market share of 6.26%, recording the biggest improvement for any bank in the top 10 of the survey.