Derivatives dealers focus on mid-caps

Derivatives dealers are focusing more on mid-cap corporates this year as an alternative to the arguably over-banked blue chip companies, say some market participants.

"We are very serious about mid-cap corporates and always have been," said Neil Yates, manager, commercial mid-corporates FX and interest rate derivatives at RBS in London. "It is an expanding market and one that holds promise," he added, saying RBS will make hires in this area.

Mark Stokes, sales and marketing director of Lloyds TSB Financial Markets in London, said that since last year, the bank has grown its presence in the mid-corporate segment to better fulfil the needs of its internal franchise customers. "This approach has required an expansion of our capabilities in this area, and is a process we will continue in 2005. Early results are positive, with a notable increase in take-up of our risk solutions," he said.

As a result of the growing interest, banks will be looking to make hires to focus on these corporates, said Simon Head, director at search firm Alexander Mann in London. "Mid-cap corporates as a client base are assuming more and more importance - this has a positive effect in attracting sales individuals who would previously only wish to cover the big caps, and individuals from other product areas such as rates and commodities," Head said.

However, he pointed out that some banks would continue to focus on blue-chip companies. "The move to increase market share among mid-cap corporates is driven by the commercial banks, rather than the US investment banks. These organisations will continue to focus on the large cap players," he added.