Saxo Bank announces plans to expand, is it too late?

Wall Street Journal interviewed Saxo Bank's co-CEO Lars Seier Christensen who claims that Saxo intends both to establish new European offices and acquire other businesses. This follows the previous announcement when Saxo claimed they intended (how about actually doing something?) to open a Dubai office.

This comes as no surprise given the rapid expansion of FXCM and Gain into European territory which Saxo has always seen as its own. The problem is that Saxo does have a strong footprint in Central and Northern Europe but is pretty weak in Western Europe where local players like IG Index and CMC Markets have long established their presence.

Update: Saxo Bank opens an office in Prague.

It seems that Saxo finally awoke after watching FXCM and Gain battle for world Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term domination with aggressive Acquisition Acquisition Acquisition means acquiring or taking possession or the securing of property, services, or abilities. To put it simply, it is the act or process of acquiring or gaining. You can acquire a work of art, you can acquire an ability such as speaking another language, you can acquire a business or shares in a company and you can acquire an accountant's service. For example, you can acquire a new car. In a broad sense, Acquisition can mean the act of taking ownership or possession of something. There Acquisition means acquiring or taking possession or the securing of property, services, or abilities. To put it simply, it is the act or process of acquiring or gaining. You can acquire a work of art, you can acquire an ability such as speaking another language, you can acquire a business or shares in a company and you can acquire an accountant's service. For example, you can acquire a new car. In a broad sense, Acquisition can mean the act of taking ownership or possession of something. There Read this Term and expansion tactics. To me it seems that the North European giant which claims some $200B in Forex monthly volume (just like Gain and a bit more than ACM) might be too late to the party. Saxo also missed the merger of two large Northern IBs - which should have been an ideal expansion move.

In my opinion, we will soon see FXCM and Saxo battle it out for European domination with FXCM probably making the next move by acquiring a Swiss broker (MIG and ACM are on red alert) and Saxo strengthening its foothold in Central and Eastern Europe – where it still has some advantage. Gain, as usual, will be lurking in the alleys waiting for ricochets.

FXCM might even end up acquiring Saxo’s retail business (if technologically possible to separate from other businesses) because Saxo is not very profitable. Its 2008 revenues were ~46% higher than FXCM’s but bottom line Net Profit was only $60m which is much less than what FXCM made. Perhaps it’ll make sense for Saxo to dispose of some retail assets to more effective players and focus on institutional clients.

What can you do? Americans are better in this Forex game.

Michael

Update: Saxo just announced the opening of a new office in Prague following a year where the bank tripled its business in the CEE region. Full press release is here: https://news.prnewswire.com/DisplayReleaseContent.aspx?ACCT=104&STORY=/www/story/05-14-2009/0005025907&EDATE=