Big on the small Scandinavian currencies

The Scandinavian currencies are small and sensitive to disturbances. This is why a partner with both expertise and strong local franchise comes in handy when trading with these, explains SEB’s Head of Foreign Exchange (FX), Anna Andrén. SEB was recently named FX Bank of the Year in the Nordics.

SEB’s FX bank caters to the needs of a diverse set of clients, consisting of everything from private individuals to large corporates and institutions. In simple terms, it helps these clients to optimise their currency trading – buying or selling the right amount, at the right price, and at the right time.

“We service clients in many different situations. It can be in connection with someone exchanging money to buy property in another country. But it can also involve large corporates acquiring foreign companies, or institutions buying assets abroad – for example, a Swedish pension fund investing in American stocks”, explains Anna Andrén.

Andrén summarizes the bank’s FX offering as follows: 

“We offer FX trading 24 hours a day to both local and international clients. We are able to do so thanks to our global network of international offices.”

Since currencies constantly move against each other, international production, distribution, trade and investments often involve FX risks. In addition, geopolitical unrest tends to cause increased volatility and rapid liquidity changes in the FX market, which, in the short term, affects smaller currencies more.

In longer-term FX trends, other factors – such as economic growth, monetary and fiscal policy, central banks' actions, and capital flows – are of greater importance. This can be seen in the continuous weakening of the Swedish krona over the past decade. Now, expectations of a new European investment agenda seem to be breaking that trend, and since the beginning of the year the krona has strengthened significantly.

“In these types of situations, with rapid movements, our clients' need for advice and expertise increases, since the FX market becomes extra difficult to navigate”, says Andrén.

An important part of the work that SEB's FX bank does involves various types of market and risk analyses. These create insights which clients then use in their FX risk management.

“Our expertise is used both in the form of large clients incorporating our economic analyses into their own risk models as part of their decision-making process, and in the form of targeted advice. The latter is true, for example, if a company turns to us to get help reducing its FX risks”, explains Andrén.

When it comes to the actual FX transaction, the bank offers competitive pricing and risk management.

“Our large market share in the Scandinavian currencies gives us a competitive advantage over players with less local affiliation, which means we can offer more favorable prices. In addition, our market position makes it easier for us to match flows and execute large transactions with limited market impact”, says Andrén.

In recent years, automation has emerged as a new trend in FX trading. Put simply, this entails a large part of the FX trading becoming electronic, and automated processes replacing manual handling in FX risk management. How does Andrén view this development?

“The FX market is the largest global financial market in terms of flows and turnover – and it is always open. This creates a great need for robustness and speed in pricing, risk management, and processes, regardless of the time of day, which is also why FX has become one of the most automated financial products.”

Andrén continues:

 “At SEB, we strive to be at the forefront of automation, both in our service offering and in pricing and risk management. All in all, we want to be our clients' preferred partner in their automation journey.”

It is no exaggeration to say that SEB's offering in the FX area is multifaceted – and this is an approach that seems to resonate with the clients. In research institute Kantar Sifo's recent Prospera survey, SEB was named FX Bank of the Year in the Nordics, for the second year in a row.