Small businesses still hugely exposed to FX swings -report

LONDON, Feb 11 (Reuters) - Only 20-25 percent of small andmedium-sized British and French companies hedge their exposureto fluctuations in currency rates which can have a huge impacton their bottom lines, a report by banking research consultancyEast & Partners showed on Thursday.

The numbers, seen by Reuters ahead of a new report'spublication on Sunday, are based on responses from more than4,400 businesses with turnovers of up to 100 million pounds or100 million euros.

They show some 80-90 percent of businesses with annualturnover exceeding 20 million euros use either option or forwardcontracts to cover themselves against foreign exchange risks.Currency movements can mean that future payments or revenuesdiffer hugely to those written into annual budgets.

But for UK companies with revenues of less than 20 millionpounds, that figure falls to less than a quarter, and for Frenchpeers to less than a fifth.

Both those figures are rising steadily, the report said, butstill show the extent to which small businesses across Europeare exposed to large swings in the value of the euro, pound, yenand dollar like those seen in the past year.

Another surge on Thursday, for example, means the yen hasgained almost 9 percent against the dollar since the start ofFebruary.

"Clearly there is more sophistication in how corporates aredealing with these issues," said Simon Kleine, Head of ClientServices with East and Partners Europe.

"The trend in France is going in the same direction butclearly British firms, possibly just due to the focus oncurrency trading in London, are slightly further ahead."

The report also showed a handful of French banks have a muchstronger grip on the business currency market than their UKcounterparts.

It listed BNP Paribas as controlling 22 percent of theday-to-day spot market in currencies, followed by CreditAgricole (13.2 percent), Credit Mutual (11.6 percent) andSociété Générale (8.2 percent), measured in terms of primarycustomer relationships.

That compared to shares of 14.7 percent, 13.6 percent and10.8 percent for Barclays, HSBC and Lloyds in the United Kingdom. (Reporting by Patrick Graham; Editing by Catherine Evans)