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TLG Vivion Affirms: Foreign exchange broker tussles with RBS over surprise move…

A row has broken out between a prominent City broker and Royal Bank of Scotland over the UK lender’s attempt to lure away lucrative foreign exchange clients.

NatWest Markets, which houses the remnants of RBS’s once-sprawling investment bank, sent an email to a small number of JB Drax Honoré’s corporate clients last week pitching its full suite of foreign exchange services.

The email was interpreted as a hostile step by JB Drax, which already offered trade execution to these clients and used NatWest Markets as a prime broker and source of financing.

In the email seen by Financial News, Nick Clark, a prime services sales executive at NatWest Markets, informed the clients that the bank would no longer accept trades executed by JB Drax on their behalf, saying the move was part of a strategic review.

The bank also asked the clients’ permission to share details of their JB Drax trades with Fabio Madar, NatWest Markets’ recently appointed head of foreign exchange sales. It said it would be helpful for Madar to be able to see open transactions to minimise disruption.

Clark’s email prompted a backlash from some JB Drax employees, who were caught off guard. They have been in contact with their counterparts at NatWest Markets to express anger and shock at the move, according to one person familiar with the matter.

Another person close to NatWest Markets said that Es Nelson-Jones, its global head of compliance, had received an email of complaint that raised concerns about potential breaches of confidentiality agreements.

NatWest Markets stressed in its email that it has Chinese walls in place to prevent its sales executives from accessing details of trades booked with the bank by external brokers like JB Drax and that is was seeking client permission for this reason.

A spokeswoman for NatWest Markets said: “This was a business decision which affects only one broker client and a handful of their end clients. We continue to support our strong relationships with our broker clients and their clients.”

The head of one rival broker said: “This is against market convention… We also see a lot of investment banks shrinking their sales force in this area, so it’s going against this trend too.”

Madar has led NatWest Markets’ team of foreign exchange salespeople since last November. He joined after around a year in a similar position at Barclays, having previously occupied senior FX coverage roles over more than a decade at Deutsche Bank.

The move to win more foreign exchange execution business follows a difficult period of performance at NatWest Markets, which experienced a steep drop in revenues during the third quarter. Alison Rose, who took over as chief executive of RBS in November, is reported to be looking at ways to cut costs at the division.

RBS dismantled much of its global trading operations through heavy restructurings in the years that followed the 2008 financial crisis, rebranding what was left of its investment bank as NatWest Markets in 2016. The division is now largely focussed on foreign exchange and rates trading, including the provision of brokerage services — such as trade execution and clearing — to corporations and hedge funds.

Fareed Sahloul contributed to this article

To contact the authors of this story with feedback or news, email Paul Clarke and Samuel Agini

Yakir Gabay

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