The Banking Executive Magazine - Septmber Issue 2021

Ahli United Bank market, they have cut back trading. Instead, banks are benefiting from the jump in activity from firms scrambling to hedge, borrow more or expand overseas. JP Morgan , UBS and Deutsche Bank are the top three banks by market share in the $6.6 trillion a day currency markets, ac- cording to a Euromoney survey. Data on market-wide foreign ex- change volumes has a lag, but the most recent figures point to a jump in corporate turnover. Corporate activity on London's for- eign exchange markets averaged $117 billion a day in April, up 16.1% from six months earlier, according to the latest Bank of England data. The growth in "non financial institu- tions" volumes, a proxy for corporate activity, slightly outpaced market- wide growth of 15.6%, the data cov- ering trading in the world's biggest foreign exchange centre showed. Deutsche Bank's global head of FX, Russell Lascala, said year-to-date FX revenues earned from the bank's cor- porate client base were up signifi- cantly on 2019 levels and helping offset reduced investor trading, though he declined to give numbers. Fierce competition for financial clients' business has squeezed bank profit margins. By contrast, corpora- tions can provide stickier and more profitable business. Lascala said Deutsche Bank was pricing unusual but more profitable trades for companies "almost on a daily basis." "Corporates are doing more business, they need to hedge more, they are expanding, they are borrowing, and doing many cross-border deals. In previous crises it was very different, they were not as strong and were playing defence," he said. The 12 biggest investment banks globally earned $28 billion in rev- enues from trading commodities, bonds and currencies in the first quarter of 2021, up 15% from a year earlier, according to Coalition Greenwich data. That was the biggest first quarter revenue for the banks in the past six years. SMES Small and medium-sized enterprises (SMEs) have also ramped up FX trad- ing. Laurent Descout, CEO of payments firm Neo, said turnover had picked up for his cross-border business after a slow start. The company had cleared $1 billion of transactions by the end of August, much of it within the last few months, Descout said, adding that firms were eschewing more complex currency option products for 'vanilla' tools such as forward contracts. The supply chain disruptions, signs of rising inflation and uncertainty about the strength of the economic recovery should keep corporate FX hedging volumes elevated. Descout expects to see treasurers locking in FX rates for the "next 12- 24 months to support medium-term cash flow and protect margins". ISSUE 153 SEPTEMBER 2021 the BANKING EXECUTIVE 27 Ahli United Bank SUPPORTS SMART INVESTOR PROGRAMME Bahrain Bourse (BHB) has an- nounced Ahli United Bank (AUB) as a ‘gold category’ sponsor for the fourth edition of the Smart Investor programme. Run in collaboration with Injaz Bahrain, the initiative aims at pro- moting financial and investment literacy among elementary school students in Bahrain. The programme seeks to provide young students with basic finan- cial concepts such as money man- agement, savings, and smart financial planning through interac- tive edutainment activities to help them make sound financial deci- sions. For the first time, the programme will launch a national challenge for participants in order to increase engagement and encourage stu- dents to participate by applying what they’ve learned Narjes Jamal, chief operating offi- cer of Bahrain Bourse, said: “We welcome Ahli United Bank as one of the official sponsors of the pro- gramme’s fourth edition. AUB’s consistency and dedication in sup- porting Bahrain Bourse has con- tributed significantly to the com- munity’s development by empowering youth, disseminating fundamental financial concepts, and helping us extend the pro- gramme to benefit students across the kingdom.” Also commenting was David O’Loan, deputy group chief exec- utive for treasury and investments at AUB, who said: “It is an honour to be able to support such pivotal initiatives by Bahrain Bourse, which is dedicated to harnessing the financial and economic poten- tial of the next generation.”