UK banks' share of corporate currency business dips

By Patrick Graham

LONDON, Jan 11 (Reuters) - The share of Britain's biggestbanks in the market supplying UK companies' daily foreigncurrency needs fell for a second year running in 2016 as firmsmade more use of new trading platforms and brokers, an industryreport showed on Wednesday.

Banking researchers East and Partners surveyed more than2,000 small, medium and large British firms and found falls inboth the volume of business done with banks and the number ofcompanies using them as a primary provider.

Barclays, HSBC and Lloyds remained the top three providers of currencies tocompanies, but all lost market share, to 14.3 percent, 13.5percent and 10.6 percent respectively.

Most other banks also saw declines. The only mainstreamlenders gaining share were ING, Bank of America Merrill Lynchand Bank of China.

The biggest non-bank provider was U.S. group Western Union,rising to 3.4 percent from 3.0 percent, followed by Monex, CMC,IG Markets, Saxo Bank and American Express. Small boutiqueproviders doubled their share to 3.8 percent.

"High Street banks continue to hold more than half themarket but at best saw no growth or decline in their share,"East and Partners' head of client servicing Simon Kleine said.

"There is a lot more shopping around, and we can see theeffects both in terms of market and wallet share. Someinternational banks have seen small increases in share andthere's been a resurgence in growth by many non-bank providers."

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

The biggest brokers say they have grown strongly byproviding more consumer-friendly software for firms to use or bywatching over the currency needs of company managers too busy tonotice that, say, the dollar has hit levels where they wouldlike, or need, 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.

($1 = 0.6987 British Pounds) (Reporting by Patrick Graham; Editing by Ruth Pitchford)