Copenhagen based retail forex broker Saxo Bank has issued an update on Swiss Franc Black Thursday, and how trading that day may affect the company’s financial reports.
Saxo Bank reports that due mainly to negative client balances on which it may not be able to collect, the bank may be forced to take a loss of up to DKK 700 million, or about USD $107 million.
However Saxo Bank pointed out that, even if no collections take place and it takes the maximum possible loss, it will remain capitalized well in excess of regulatory requirements. Taking the estimated maximum loss into account, total capital at Saxo Bank A/S would be DKK 1.97 billion, while its capital requirement is DKK 1.46 billion. At parent company Saxo Bank Group, total capital would be DKK 2.15 billion while its capital requirement is DKK 1.71 billion.
In an exclusive interview with LeapRate last week, Saxo Bank CFO/CRO Steen Blaafalk described what the incredible action was like after the fateful SNB announcement. Blaafalk also points out how Saxo Bank’s reduction of leverage on Swiss Franc CHF pair trades was lowered well in advance of the SNB’s removal of the CHFEUR 1.20 floor. A smart move, it seems, as the $107 million figure could indeed have been a lot worse, if clients had used more leverage in their CHF positions.
Saxo Bank’s statement on the loss and its capitalization level can be seen here.