Banks losing share in corporate currency business - report

LONDON, Jan 17 (Reuters) - Small and medium-sized Britishcompanies are increasingly looking outside banks for foreignexchange in search of better rates and services, a survey showedon Sunday.

Research company East & Partners' survey of more than 2,200UK firms with annual revenues of up to 100 million pounds ($143million) showed roughly 10 percent use at least one of thedozens of brokerages specialising in payments in and out offoreign currencies.

It listed the top six brokers in the space by market shareas Western Union, Monex, CMC, American Express, Alpari andUKForex.

More than 8 percent of those that trade in the moresophisticated currency options market also use brokers insteadof banks, the survey showed.

By offering companies currency at much tighter "spreads"between buy and sell prices than the rates banks give each otherand their biggest clients, the brokers have been instrumental inmaking forex trading as a whole more competitive.

The biggest brokers say they have grown strongly by watchingover the currency needs of company managers too busy to noticethat, say, the dollar has hit levels where they would like, orneed, to buy or sell.

That has made millions for a generation of forexentrepreneurs but has also begun to draw a response from banks.A number have tightened the spreads offered on ordinarycorporate transfers and some, such as German lender DeutscheBank, have invested in new client service centres incheaper locations outside London to help address the challenge.

The survey showed Barclays, HSBC andLloyds all still enjoy double-digit percentage sharesof the spot trading market, at respectively 14.7 percent, 13.6percent and 10.8 percent. Citi and Deutsche dominate onoptions with 11.9 and 11.1 percent respective shares.

"While high street banks continue to perform strongly, thereare clear examples of other FX providers gaining market share,particularly in the Micro and SME segments," said Graham Buck,senior analyst at East & Partners.

"Newer market entrants that differentiate their offerings byservice quality or value for money can capitalise on anycomplacency from their more established competitors and gainground across market, mind and wallet share," he said.

($1 = 0.6987 British Pounds) (Reporting by Patrick Graham; Editing by Mark Potter)