Whether it be your bonus, fixed allowance or deferred stock, receiving your income in more than one currency requires pro-active Foreign Exchange (FX) capabilities.
Here, Private Client FX Dealer Greig Tonks and Private Banker Louise North discuss how they help investment bankers to manage their exposure, and why Investec’s holistic approach could overcome some of the challenges you face.
What is the typical income profile of the investment banking professionals we work with who have Foreign Exchange needs?
Louise: “The investment banking professionals we work with often receive a high proportion of variable income in the form of bonuses, fixed allowances and deferred stock. While these UK-based clients often receive their salary in Sterling, they may elect to receive other parts of their income in US dollars or work for American firms.
What financial challenges do these clients face?
Greig: “To give an example, we have UK-based clients who work for US investment banks who are partly compensated in US dollars. This means they have ongoing exposure to GBP/USD movements which could make their income unpredictable over time. We work closely with these clients to help execute a strategy based on their financial goals.
We aim to assist with both short and long-term requirements and as a private bank, we specialise in helping clients who have a complex income structure.
How can Investec help clients with their FX needs?
Greig: “Firstly, for clients who share their immediate conversion requirements, we proactively monitor the market, aiming to capture sudden movements in the rate.
Secondly, we aim to facilitate longer-term solutions. If eligible, this may include the use of FX forward contracts*, which look to hedge ongoing exposure and help secure an exchange rate on expected funds up to two years in advance.”
Louise: “On a day-to-day basis, our clients can hold up to 15 currencies in our Currency Access Account and view balances online in one place.
It’s also important to note that at Investec, FX is integrated within Private Banking and Investec Wealth & Investment so that we can take a joined-up approach to your needs. This includes considering multi-currency income as part of any affordability calculations if you’re looking for a loan or mortgage.
Our clients have different risk appetites and financial goals so we work with them on a bespoke basis and ensure they have direct access to our FX dealers.
What message do you have for clients during bonus season?
Greig: “We know that our clients may receive a significant proportion of their income as a cash bonus. For those that have elected to take US dollars, we’d welcome the opportunity to look at how we can add value, both ahead of the funds being received and after they have been paid. We aim to assist with both short and long-term requirements and as a private bank, we specialise in helping clients who have a complex income structure.
How do you help clients to spot opportunities and manage risks?
Greig: “Our team of economists monitor the global markets and provide regular commentary so that we can track the trends and help develop appropriate strategies. Our clients are financially aware and know that inflationary pressures and expectations of central bank intervention are shaping market movements at the moment, so they need us to be forward-thinking and efficient.”
Louise: “That said, our clients have different risk appetites and financial goals so we work with them on a bespoke basis and ensure they have direct access to our FX dealers.”
Want to know more about how we can help you with Private Banking and Foreign Exchange?
Market commentary provided by Investec Bank plc is provided for information purposes only and does not constitute financial or other advice. It is advisable to contact a professional advisor if you need financial advice. Your use of and reliance on any of this content is entirely at your own risk.
*You can only book an FX Forward which is for an underlying personal or commercial spending purpose. You cannot book an FX Forward for investment or speculative purposes, for example in order to achieve a gain based on movements in exchange rates. Also, you cannot book an FX Forward on behalf of any other person. Additional terms and eligibility criteria apply for FX Forwards.