Swissquote gains unilateral access to European market via acquisition of Luxembourg based bank
Swissquote’s expansion into international markets is in full swing. This morning’s announcement of the acquisition of a European bank demonstrates this further. Here is our full report and analysis
Swissquote Bank is no stranger to expanding its methodology via mergers and acquisitions.
During the course of this decade, the company has grown its operations tremendously via strategic internal methods as well as the acquisition of two companies, those being ACM and MIG Bank over five years ago.
Once amalgamated into the Swissquote stable, the company had positioned itself as Switerland’s largest online bank, however the ethos at the time was to maintain its Swiss modus operandi and cater to a global audience from the elevated position as a Swiss bank with Swiss operational parameters and a completely in-house, highly secure trading system.
Today, Swissquote’s international aspirations have been alluded to, as the firm has acquired Luxembourg-based Internaxx Bank S.A. giving Swissquote unrestricted access to the European market.
This morning, Swissquote stated that Internaxx clients – mainly international investors and expats wanting an online access to international investments combined with the safety of a European bank – will in the future be able to profit from Swissquote’s even broader range of products and services.
The purchase agreement signed with Interactive Investor Limited, which is majority controlled by J.C. Flowers & Co., will come into effect following regulatory approvals of the transaction.
This marks another stage in Swissquote’s aspirations toward maintaining a highly international presence via its intrinsically Swiss base.
FinanceFeeds recently gained a comprehensive insight into Swissquote’s vast project which involves conducting an industry first for any Swiss Bank which provides electronic trading, that being the move toward hosting at Equinix’s LD4 facility in West London.
In the spring of this year, Swissquote explained to FinanceFeeds “This year we have an Interbank FX project to go from margin and deliverable FX, which is in progress and should be ready for end of the year as there is a lot involved in its development and implementation.”
“Perhaps the most revolutionizing but most advanced project in the respect that we have completed most of the infrastructural work require is our move from our existing in-house data center which is underground here in Gland to Equinix’s LD4 location in London.”
“For the needs of clients and FIX and execution and pricing speed, we will be moving to LD4 and will not only need this for connectivity but globally, we need to replicate other pricing engines in London and for execution. The main server will stay here but we will host a second one in LD4 so it is a very big project between our FX dealing department and IT division, which will help us stream prices between LD4 and all the venues that are being worked with such as oneZero, PrimeXM, Integral, along with others in the pipeline like FXSpotstream, hence we will be able to plug into any pricing engine from London so that it doesn’t have to go to Switzerland”.
Thus, today’s announcement of the acquisition of Internaxx is in line with the firm’s direction to expand beyond Switzerland’s borders in terms of reach and client base.
The EUR 27.7 million purchase price includes goodwill of approximately 25 percent and is being fully financed from the group’s own funds.
With regard to the acquisiton of Internaxx, Swissquote Group CEO Marc Bürki today stated:
“Unrestricted access to the European markets is very important to Swissquote, especially as Brexit draws closer. By acquiring Internaxx, we aim to further consolidate our standing as first choice for international clients (expats) thanks to our specialized services.”
Swissquote considers that Internaxx Bank has been successfully operating internationally as a fully licensed online bank since 2001. With some 12,000 clients for a total of EUR 2 billion assets under custody, it reported revenues of EUR 10 million for 2017.
Internaxx Bank has been successfully operating internationally as a fully licensed online bank since 2001. With some 12,000 clients for a total of EUR 2 billion assets under custody, it reported revenues of EUR 10 million for 2017. The bank has been generating profits since 2006.
With an international team of multilingual personnel, Internaxx has a range of services and a client relationship approach that are largely compatible with those of Swissquote.
The present Internaxx platform is to be progressively integrated by Swissquote and the offering complemented with additional Swissquote Bank markets and products. Internaxx Bank CEO Dave Sparvell today stated: “Swissquote has the resources, scale and platforms to accelerate our ambition to provide clients with the broadest range of market-leading products and services. As we integrate the Swissquote family, we will help more expats and international investors achieve their financial objectives.”
Currently, we are one of the largest electronic trading firms in the business with 22 billion CHF in assets under management which includes our securities trading division and every business unit. In terms of FX, we have around 400 million CHF in assets under management, which means that Swissquote is respected highly by the Swiss banking authoriites. The 2.5 million products that we offer are executed not just on an OTC basis but the majority are on NICE, EUREX, and SIX. FX represents around 200 products” said Mr Le Baud.
Expanding on the execution methodology, FinanceFeeds met earlier this year with Jurg Schwab, Head of Trading, Director and member of the senior management at Swissquote who explained “Swissquote is a direct member of Euroclear, and it is very rare in the electronic trading industry to have direct access to stocks. We also have a dedicated bond platform, which executes on an OTC basis. All trades are cleared onsite” he said.
“Switzerland is one of the few countries where bonds are listed on exchange, however for global markets we do it on an OTC basis, whereas we are a full member of Eurex for trading and clearing, this being a USP in Switzerland” Jurg Schwab, Director and Head of Trading, Swissquote Bank SA
“We specialize in providing online direct access for customers, therefore we do not differentiate between trading option on US stocks such as Apple or on Swiss stock and the trading experience should be equally accurate for both, as the margin is all calculated in a fraction of a second” he said.
“We also have a well recognized OTC platform called SwissDOTS. The name is derived from a contraction of “Derivative OTC System”. We currently work with five partners which offer over 80,000 leveraged products. Comparing this to all products traded on SIX, there are around 25,000, hence SwissDOTS users can access three times more products than SIX, and the opening hours are from 8.00 am till 10.00 pm, so therefore traders wishing to trade after the hours that other venue may close trading for the day can continue to trade derivatives on SwissDOTS”Jurg Schwab, Director and Head of Trading, Swissquote Bank SA
With the acquisition of Internaxx being the latest in the line of expansion projects in Swissquote’s armory, the company clearly demonstrates its ability to provide the extremely high levels of security offered by Swiss banking institutions with in-house infrastructure that meets the stringent and unique Swiss operational standards whilst appealing greatly to a wide international audience.