Improve currency management costs

april 26, 2022

If you read our summary report you will improve your currency management, avoid price-walked margins, and stop loyalty penalties.

James Yerkess, former Global Head of Retail Banking and Wealth Management FX at HSBC and Lorentz Corneliussen, Senior Advisor at Bankbrokers have written a detailed summary paper based on their industry knowledge.


Understand how to check retail margins to improve costs

Historical trends show that banks take advantage of local market competitive pressure to set retail margins differently across currency pairs and countries, even if the bank offers its services in both countries.

Banks apply retail currency margins to a transaction to cover the cost of doing business and making a profit. Although, companies not regularly checking these margins can often result in banks price-walking the retail margin upward and penalising loyalty

In addition, retail margins often widen over time if a company is not checking them. Also, a bank can take advantage of this lack of monitoring and slowly price-walk the retail margin upwards to generate more profit.

James and Lorentz explain how to regularly check retail margins to ensure you get a good deal.

Explore a series of steps to improve currency costs and reduce risk

Our detailed perspectives explore steps to improve currency risk and cost management. In particular, how to monitor and check risk and retail margin spreads.

Banks often price walk retail margins upwards. James and Lorentz show how to stop this. Also, they discuss how to stop companies from being penalised for loyalty to one bank

Review a case study to show you where you can improve currency management costs

A large family-run car import company used benchmarking data to check its currency management volumes of EUR 800m per annum. This exercise included reviewing the costs and retail margins charged by a small group of banks it was using.

The detailed benchmarking analysis from Bankbrokers mapped high hidden charges and significantly higher earnings for the banks than expected. This increased cost was due to price-walking and loyalty penalties being present but not visible.

Check the benefits and challenges of electronic trading platforms

Businesses can reduce risk and improve retail margins by using multi-dealer electronic platforms. However, whilst there are good benefits to doing this, there are also broader points to consider.


For a copy of the full report email jamesyerkess@bankbrokers.co.uk

James Yerkess

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