The latest entrant in the race to offer clients access to multi-dealer platforms comes in the form of an e-marketplace that aims to address a broad array of needs in the capital and treasury markets for mid-market European corporates.
The initiative is being developed by five European partner banks: Banco Santander Central Hispano (BSCH), Commerzbank, the Royal Bank of Scotland (RBS), San Paolo IMI and Société Générale. These five institutions were selected because of their link via BSCH’s cross shareholding in each of the banks.
The venture will be independently owned and operated, with a proprietary technology platform. As of mid-August, the consortium had short-listed a group of potential technology partners.
The electronic platform is due for launch in Q1 2001, and will provide online access to pre-trade, trade and post-trade services of the five participating banks. The service will be offered over a private network for security purposes, but the partners are looking to add Internet access soon after launch.
Initially, the system will offer FX spot and forwards, interest rate derivatives and fixed income services, with additional product launches to be added down the line. Currency options and swaps may also be available from the outset. Clients will be able to access multiple price quotes, execute trades, conduct research and use chat rooms, among other services.
According to Martin Spurr, head of e-Ventures at RBS in London, the main difference between this latest venture and many other multibank consortia is that this service will offer multiple products across a single platform.
“This is an extension of the traditional banking relationship,” says Spurr. “Existing e-offerings are either multi-products in a single bank platform, or single products in a multi-bank platform. So customers will be able to access this platform via other relationships, such as cash management.”
The European partners represent five banks with strong client franchises in their respective domestic markets. Spurr says that in terms of fixed income and bond issuance, the total combined distribution strengths of the five partners will make the consortium the second largest issuer of euro denominated bonds.
“The European consortium is interesting because it attempts to go down the food chain,” notes one industry source. “It’s not aimed at the likes of BP, it’s trying to create an environment whereby clients can do a range of activities typically done with a single institution.”
Whereas many multi-bank initiatives that have been announced so far are aimed at the highly professional client, this venture will offer its services to a broader client base. The portal is targeted at both the professional market, as well as the non-wholesale market ‘ namely, mid-market corporates and smaller enterprises, says Spurr, who adds that the service should appeal to both corporate clients and fund managers.
“If a major corporate with existing credit lines outside the five partner banks wants to register on the service, he can invite his liquidity banks to show their prices over the platform,” says Spurr. “Meanwhile, those clients that only have a single bank relationship can view multiple prices; although, they can only deal with the bank for which a credit relationship exists.”
“Credit means the smaller tier client doesn’t have the power to break away from its banking relationships, so our approach will allow even un-rated corporates to gain access to multiple bank prices, without leaving their relationships with any of the five partner banks,” says Spurr.
“As the site develops, it should quickly become a comprehensive portal for clients,” says Spurr, adding that the service will not be exclusive to clients of the partner banks.