"We were very pleased with our foreign exchange performance in 2003," Cameron told FX Week at the bank’s annual results conference last Thursday. The UK and European spot forex business had a particularly good year, added Peter Nielsen, RBS’s global head of foreign exchange: "Specifically within this category we grew revenues from the institutional client base and made significant progress in both Asia and North America."
The bank’s global currency options business also had a good year. "We made some key appointments in late 2002 that brought with them a change in trading style that has had considerable effect on the business in 2003," he added. "We also targeted the non-reciprocal bank sector and hedge funds."
The growth in the online foreign exchange trading market has further contributed to the bank’s success, with volumes executed over e-trading platforms growing by more than 800%. "E-trading formed a key part of our foreign exchange strategy last year. We expect the online foreign exchange market to consolidate into the hands of a few large players, and it is clear RBS will be one of those players," said Cameron.
Active and volatile currency markets in 2003 helped UK banks across the board to increase profits from forex dealing, said officials, with the continued dollar decline remaining the key theme throughout the year. "There has been a strong pick-up in volatility in the market, which has brought increased client activity. Foreign exchange volumes are up across the board," said Ivan Ritossa, global head of foreign exchange at Barclays Capital in London. This is in contrast to 2002, where a lack of big currency moves in the market meant there was little need for clients to hedge, he added.