Some Saxo Bank customers suffered heavy losses when Switzerland removed the ceiling on the franc again the Euro last Thursday.
Saxo – one of the biggest players in retail foreign exchange trading – said that it has enough capital to cover its losses should customers default on loans and other payments. The problem in the short term is uncertainty about exactly how many customers were affected and when and how much they can pay back.
“I believe it is the same for everyone in the industry when a rare event like this happens," Steen Blaafalk, Saxo CFO told Finans.dk. "People lose money and cannot pay what they owe us. We’re trying to reach an agreement with them, but it is sometimes hard to pluck hair out of a bald man’s head.”
Saxo expects to spend the “next couple of weeks” making arrangements “with each individual client,” Blaafalk said. “They all know what they’ve lost. Now it’s a matter of saying what’s possible and what is not possible.”
More problems ahead
Blaafalk declined to speculate on how big the loss to the bank might be, but estimates have ranged as high as 500 million kroner
Saxo came under fire on Friday for being too slow to react to the changes in the franc, but Blaafalk said that customers had bee warned as early as last September of volatility in the currency market.
Blaafalk warned that more uncertainty could be expected in the coming months. Clients were told to brace themselves for more market shocks as the European Central Bank unveils the details of an unprecedented bond-purchase program tomorrow and warned that if the anti-austerity party Syria prevails in the upcoming Greek election, markets across Europe would be impacted.