International banks have stronghold in Italian derivatives market

The first survey of Italian derivatives dealers conducted by Risk Italia , the Italian language edition of Risk , found that international banks have a stronghold in the Italian derivatives market. But the results were also encouraging for Italian banks, which have made big investments over recent years.

Risk Italia asked 100 market participants in the Italian over-the-counter derivatives business, including banks, insurance companies, asset managers and non-financial companies, to rank their preferred dealers.

JP Morgan Chase dominated the rankings, gaining the top ranking for its quality of risk management and derivatives dealing advice and top rankings for credit derivatives.

Deutsche Bank, Goldman Sachs and JP Morgan Chase secured top-place rankings for interest rate and currency derivatives categories. SG gained the top rankings for equity derivatives products.

However, Italian banks, including Banca Nazionale del Lavoro (BNL), UniCredit Mobiliare (UBM) and Banca Intesa, ran close behind in the survey. BNL gained 10 top-three rankings out of 15 categories for the interest rate and currency derivatives products, and was named the top Italian bank for these categories. Since it was freed from state control in 1998, BNL has placed increasing emphasis on selling relatively high-margin risk management products to its traditional corporate customer base.

Banca Intesa was the leading Italian bank in credit derivatives. In the late 1990s, Banca Commerciale Italiana was a pioneer in the fast-growing credit derivatives business. It used credit derivatives as a short cut to internationalising its loan book - in particular its exposure to US credits. Soon after BCI agreed its merger with Banca Intesa, that strategy went sour, with Enron, WorldCom and other high-profile defaults. But the dealing expertise survived and in the rankings Banca Intesa competed head-to-head with JP Morgan Chase in the Italian market-place.

UniCredit Banca Mobiliare (UBM) and Banca Akros performed well in equity derivatives, gaining a number of top-three rankings. UBM was named the top Italian adviser for quality of risk management and derivatives dealing advice.

Winners of the rankings were announced at Risk’s inaugural Risk Italia conference this week in Milan. The full rankings and an accompanying report can be found in the June issue of Risk, in the latest edition of Risk Italia and at www.risk.net/Risk Italia.