Saxo Bank A/S

The negative outlook on Saxo reflects the downside risks the bank faces in the next 12-24 months until it strengthens its compliance and risk control framework. We assume that Saxo will continue to employ robust processes in other key areas of risk management, such as client and counterparty. We could lower the long-term rating over the next 12-24 months if further material control deficiencies come to light or if Saxo fails to correct the existing deficiencies. While less likely, we could also lower the rating if we observe evidence of franchise damage, or if we expect a weakening of tangible capitalization that leads to a RAC ratio below 15%. Furthermore, we could lower the rating if Saxo fails to maintain

...We believe Saxo Bank A/S will continue to make progress in widening its burgeoning market position. Over the past 30 years, Saxo has built a high-functionality securities brokerage platform, with total assets of about Danish krone (DKK) 89 billion (about 11.9 billion) at year-end 2023. Nearly 70% of 2023 revenue can be attributed to the direct business via its trader and investor segments in the form of trading-related and interest earnings, with the other 30% relating to the Saxo Institutional customer business. While this is expected to support business stability, Saxo operates on a smaller scale than more diversified global peers, such as IBG LLC and The Charles Schwab Corporation, which could hit earnings over time....

Full Report