Deutsche Bank Tops Currency Trading List For Ninth Year In A Row

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In what comes as undeniable proof of the fact that Deutsche Bank (NYSE:DB) has a strong grip on the global currency trading industry, the annual Euromoney Institutional Investor poll for 2013, ranked the German bank the biggest currency trader yet again – for the ninth consecutive year. [1] The results of the poll announced earlier this month show that Deutsche Bank improved its market share in the currencies business from 14.6% in 2012 to 15.2% in 2013. ((Citigroup Cuts Deutsche Bank Currency Lead on Asia Trade, Bloomberg, May 8 2013))

Quite notably, Citigroup (NYSE:C) is hard on Deutsche Bank’s heels with a market share of 14.9% this year followed by Barclays (NYSE:BCS) and UBS (NYSE:UBS) that captured the third and fourth spots respectively with market shares of over 10% each.

See our full analysis for Deutsche Bank | Citigroup | Barclays | UBS

The importance of its trading business to Deutsche Bank becomes evident from a single glance of the chart above as sales & trading contributes to nearly half of the bank’s total value. And while the largest bank in mainland Europe holds a commanding position in the global debt trading, commodities trading as well as equities trading industries, it has established itself as the undisputed leader of the currencies business.

The table below summarizes the market share of the global banking giants that populated the list of ten biggest currency traders in Euromoney’s survey for 2013.

Bank 2013 Rank 2013 Share 2012 Share 2011 Share 2010 Share
Deutsche Bank 1 15.18 14.57 15.64 18.07
Citigroup 2 14.90 12.26 8.88 7.69
Barclays 3 10.24 10.95 10.75 11.09
UBS 4 10.11 10.48 10.59 11.30
HSBC 5 6.93 6.72 6.26 4.55
JPMorgan 6 6.07 6.60 6.43 6.35
RBS 7 5.62 5.86 6.20 6.51
Credit Suisse 8 3.70 4.68 4.80 4.44
Morgan Stanley 9 3.15 3.52 3.64 2.92
BofA Merrill Lynch 10 3.08 2.41 - -

While the table highlights Deutsche Bank’s dominance over the currencies market for the last four years, the bank has actually remained rooted at the top spot since 2005. [2] Its strength in the market comes from its significant presence across Europe, which allows it to offer its foreign exchange services to a large chunk of the world’s developed nations.

Interestingly, another banking group with a completely different business model focused on the world’s developing nations has shown remarkable growth over the years in the currency market – Citigroup. The geographically diversified banking group has nearly doubled its currency market share in the last four years – the result of strong growth in the Asia-Pacific currency market over recent years.

We capture the impact of an increase in currency trading revenues on Deutsche Bank’s shares through our forecast for the bank’s total FICC trading yield as shown below. You can understand how improvements in yield figures will help the bank’s value by making changes to this chart.

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Notes:
  1. FX Survey 2013, Euromoney Website []
  2. Deutsche Bank maintains top ranking in currencies, The Wall Street Journal, May 5 2011 []
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