Natixis is the corporate, investment and financial services arm of Groupe BPCE, the second largest banking player in France. It operates in three areas, corporate and investment banking, investment solutions (asset management, private banking and insurance), and specialised financial services. The company employs 22,000 people across 68 countries.
Serving our clients worldwide
Situated within the corporate and investment arm of the business is the forex (foreign exchange) department, headed up by Philippe Jeanne. The department’s strategy is based on providing a seamless range of FX products ranging from spot, FX swaps, forward and vanilla plus long dated options. Moreover, Natixis leverages its expertise and innovation capacity to develop customised products that cater exactly to client requirements.
The department’s client portfolio is a diverse mix of private and public bodies. “Our trade is pretty balanced between corporate and non-corporate counterparties,” says Mr. Jeanne, “this is largely down to the make-up of the client bases of Banque Populaire, more corporate-driven, and Caisse díEpargne, more focused on investment.”
Natixis is a global trader, with subsidiary offices in Singapore and New York, as well as the main French office. It broke out of the Franco-European market in 2008 through a deal with a team of Hedge Funds sales staff. “We got approval to have a team of seasoned professionals and develop the hedge fund market in the US. We had no representation there on this segment previously, so it was a great opportunity.” This has been a great success for the business and, according to Mr. Jeanne, shows that although Natixis was not well known in the country, it is able to do well, even in such a highly competitive market, due to the consistency of service it offers.
Forex value-added services
It is this word, consistency, that lies at the heart of the Natixis business strategy Philippe says: “There is not a great deal of variation between companies in terms of pricing and we have to find other ways to gain a competitive advantage and offer consistent value-added services to our clients. One of the ways the company is approaching this is through dealing in smaller regional currencies, having identified that the forex market is moving away from what Mr. Jeanne describes as the exclusive world of the Euro and Dollar. As well as obvious currencies such as the Yen and Yuan, it is expecting to see South-East Asian currencies increasing in importance, and is stepping up its efforts in Asia to take advantage of this shift.
Competitive and comprehensive internet offer
The other big news in forex is e-business. Natixis has observed a steady year-on-year increase in the importance of monobank platforms and estimates that 80 percent of worldwide trading in the forex market is already done online.
The company has taken a proactive but considered approach to this opportunity. There are six big names who provide monobank platforms currently, but there is only room for maybe another four. So the market has moved towards multibank platforms and flow integrators like FXall, Currenext, 360T, Bloomberg, etc. It is these particular platforms that Natixis contributes to, allowing end users to see the prices being offered by the company without developing and promoting its own monobank platform.
However, this is not to say that it doesn’t have one. “We invested in a very efficient price engine to automatically hedge our deals when needed, which streamlines the activities of our teams,” says Mr. Jeanne, “after we had that up and running, we developed our own monobanking platform. We use this for internal clients, subsidiaries of the group, and group clients, but not the end client.” There are many advantages sales teams can focus on sales while the origination to settlement process can be taken care of automatically using this software, which in turn enables them to carry out a greater number of transactions than they would have been able to previously. The time freed up by this increased efficiency also enables the company to help its clients with more difficult transactions, such as carrying out a spot investment in emerging countries, where regulations are unique, or in markets where levels of liquidity are different, for example.
24-hour secure deal processing for all FX products
This e-business venture, the company’s major investment of the past couple of years, is something that is already reaping rewards. “It’s an odd situation,” muses Mr. Jeanne, “it’s something that you can’t predict or project results for before you do it, but which become apparent almost immediately after you have it in place. And if you don’t get into it in the first place then you’re out of the game.î It has also made it easier to approach new clients and try to break into new regions.
“I was visiting new clients in Australia, an area where we haven’t been very active until now, and I was able to say to them you can get our prices directly if you have the internet – you don’t need to keep making calls for live prices as you would have had to in the past. And it’s available 24 hours a day, so there are no time-zone problems. It is something that is very important to us, both in terms of the management of deals and from a commercial standpoint – there is no longer the need to invest in huge adverts or even establish an office when targeting a new market because you can be there virtually.”
What does the future hold?
While it is clear that the future in terms of trading is digital, what else does Mr. Jeanne see for the future? “The main thing, for the markets as a whole I think, is a return to the sort of middle ground of investments. The days of high risk, exotic products of the early and middle of the last decade have gone and they will not return. But we are starting to see people come back from the other extreme, where there was massive risk aversion after the crash. The risk/reward balance has returned – clients are willing to take measured risks but not in the way they were before. We are regressing to the norm. On top of this, the move away from Euro vs Dollar that is already in motion will become increasingly apparent and come into play even more. All of this is a big change for the industry, but that is the way the market is moving and we must move with it.”
The information herein is for information purposes only. It should not be construed as an offer or solicitation with respect to the purchase, sale or subscription or as an undertaking by Natixis to complete a transaction. Natixis is authorised in France by the ACP as a Bank & Investment Services providers and subject to its supervision and is regulated by the AMF in respect of its investment services activities.