Banking & Finance

Denmark’s Saxo Bank sees white-label partnerships as main growth driver in Asia

The Hong Kong unit of the Copenhagen-based bank will add A shares and yuan bonds this year as part of its multi-asset online trading platform for clients

PUBLISHED : Tuesday, 13 March, 2018, 7:01am
UPDATED : Tuesday, 13 March, 2018, 5:14pm

Saxo Capital Markets, the Hong Kong unit of Copenhagen-based Saxo Bank in which Chinese carmaker Zhejiang Geely Holding Group has agreed to buy a 51 per cent stake, said it is expecting more partnership with brokers and fintech firms as it strives to grow its technology white-label business in the region.

Providers of white-label trading technology such as Saxo Bank allow third parties access to its trading technologies and systems, which the purchaser can make it appear as their own.

In Asia, Saxo Capital Markets does not have a banking licence unlike its parent. It expects its white-label partnership business to continue to be its growth driver as it inherits the fintech business from its Danish parent.

“Partnerships are fundamental to the growth of our business,” said chief executive Matt Long, adding that Saxo Capital Markets plans to at least double its headcount from the current 11 this year.

“Saxo Bank has done its first white-label partnership since 2001. Partnership is the future [of financial services whereby one could decide to] collaborate or die. I would expect us to do more partnerships.”

Long said he also expects the Hong Kong branch to begin offering A-share trading through the stock connect in the third quarter, the platform through which foreign investors can trade equities listed in China.

With that capability to trade an additional asset class, Long said Saxo will be able to service family offices and other banks better through licensing their trading technologies to these clients.

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Aside from A shares, Saxo also plans to offer domestic Chinese bond trading through the bond connect, the platform that provides mutual bond market access between Hong Kong and the Chinese interbank bond market to investors.

These new asset classes will add onto the 35,000 financial instruments that investors can currently trade through their brokers or banks that are connected with Saxo’s trading platform via white-label arrangements.

In May 2016, Saxo Bank entered into a white-label agreement with Lufax, a leading Chinese online financial services provider, that allows clients of Lufax to trade exchange traded funds and equities through Saxo’s trading platform.

Although Lufax has not gone live with the service, but Long said he expects that partnership will serve as a template for agreements with other securities firms, asset managers and banks in Hong Kong and China.

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Sources close to the company said Saxo will sign a white label deal with Hong Kong securities broker, Valuable Capital, this week.

Separately, Long said the investment by carmaker Geely is still pending regulatory approval. The Chinese group, which also owns Swedish carmaker Volvo and a near 10 per cent stake in Germany’s Daimler, had proposed to lift its stake in Saxo Bank to 51.5 per cent in October 2017 for about US$800 million. Geely had first proposed to buy a 30 per cent in Saxo in May 2017.