Andrew Brown, global head of FX: "Quick, robust and scalable technology solutions will be critical in terms of our ability to compete" February 7, 2013
Andrew Brown, global head of FX: "Quick, robust and scalable technology solutions will be critical in terms of our ability to compete"
For the first time ever, BBVA ranks #1 Top Latam FX Forecaster for full 2012 in Bloomberg Markets. In this interview the global head of FX business in BBVA analyzes this achievement and comments the trends of the largest and most liquid market in the world.
Q: Recently BBVA has considerably improved its position in the trade media polls. It ranks first in the Top Latam Forecaster in Bloomberg Markets. What is the main reason for this?
This has been a pleasing development and one we take pride in. When we started this project, we set several non financial objectives that fell into the category of 'client engagement'. Surveys, polls and awards and our relationships with relevant aspects of the industry media have a direct influence on client perception. External benchmarks are the confirmation of what we often believe ourselves - such as Latam - but provide tangible evidence of our FX credentials that we can use to showcase our capabilities with clients. If you also believe in the correlation between revenue and volumes, then any initiative that develops the broader client relationship can only be positive for the business.
Q: Looking at business volumes, FX is one of the most important businesses in the world.
The FX market is the largest and generally considered the most liquid financial market in the world with daily volumes of US3.98 Trillion (BIS Triennial Survey, April 2010) and has seen fairly continuous growth since the BIS starting collecting data back in 1988. London is by far the largest market centre in the world with 37% of traded volumes and currencies are most frequently traded against the US dollar. 42% of all client flow is now electronically traded which rises to 60% if we include all interbank activity.
Q: How would you describe the current business environment?
2012 was a challenging year for many, but at BBVA we have been fortunate enough to be somewhat countercyclical showing growth in our key measures; namely revenues and client volumes. Whilst we have made changes to our business, we still have much work to do if we aim to meet our longer terms objectives. In a world where regulation, capital requirements and public sentiment limit complexity and duration, FX will and should be a key asset class in any global markets business.
Q: What FX services do we offer?
We plan to be a full service provider of FX products and services to our target client base(s). By full service, we mean spot, forward, options both G10 and emerging markets. Clearly at BBVA we have what we feel is a competitive edge in our Latam business which we want to use as a means of differentiation. But whilst Latam is significant in terms of emerging markets, we also want to ensure we develop the linkage to other markets that may also have relevance to many of our clients. It may be generic G10 or accessing the CNH market through Hong Kong or developing the relationship with Garanti Bank in Turkey where we recently booked our first TRY options. The customer focussed theme, as I hope you will realise, is absolutely core to what we do.
Q: And to what kind of clients?
In terms of clients, our strategy at the outset was to develop and improve existing client relationships but also to ensure we add new client relationships over time. In our core markets we extend our balance sheet in a meaningful way so it is not surprising that we have experienced success with the Corporate and Commercial client base. It is essential that we become as meaningful as possible to as many clients as possible be they internal or external.
The Group is also in the process of making a significant investment to develop our in-house eCommerce capabilities. The concept of quick, robust and scalable technology solutions will be critical in terms of our ability to compete. The associated operational efficiencies are also compelling.
Q: What business perspectives do you have for 2013?
FX is a very natural asset class for BBVA for many reasons and we need to ensure we continue to execute the customer centric business model that has served us well over the last two years. Innovation, creativity and change are inevitable requirements for further growth but we are fortunate indeed to have a very strong leadership team and also excellent trading and sales colleagues throughout our global business.