Currency riskMethod16 September 2026 · By Équipe ELEGG Finance · 7 min read

Is your bank expensive on FX? The ten-minute test

A five-question test, written for an executive with neither the time nor the appetite for the technical detail. At the end, you know whether the subject deserves attention — and what it might be worth.

This test is not for a treasurer. It is for a managing director or a finance director wondering whether FX belongs on this year's list, without spending half a day to find out.

Five questions. Each answered in two minutes with a bank statement in front of you.

Question 1 — What volume do you convert each year?

Add up all your foreign-currency receipts and payments over twelve months, converted into euros. Not export revenue: the volume actually converted.

This is the multiplier for everything else. An FX margin applies to that volume, not to your revenue or your profit. A company converting EUR 8 million a year has an exposure on a different scale from one converting EUR 400,000, even if their revenues are similar.

Question 2 — Do you know what you pay?

Look at your latest statement and find the cost of your last FX transaction. Not the transfer fee: the cost of the currency conversion itself.

If you find a quantified line, it probably represents only a small part of the real cost — the part billed explicitly.
If you find nothing, that is normal: on most transactions the bank's remuneration is built into the rate applied and appears on no line.

In both cases, the honest answer to the question is « no ». That is not a management failing: it is how the product is built.

Question 3 — Have you ever asked for two quotes on the same transaction?

Not twice from the same bank: two different counterparties, at the same moment, on the same amount and the same maturity.

This is the most revealing test of the five, and the least practised. Simply asking for a second quote usually tightens the first, because it signals that price has become a subject. A company that has never put its FX out to competition has no idea of the level at which it deals.

Question 4 — Do you use anything other than plain forwards?

Collars, participating forwards, barrier options, accumulators: if your company holds any of these, the stakes change in nature.

These products carry no premium, so nothing changes hands at inception, so nothing invites you to check. Yet they are the ones whose price is hardest to recompute, and therefore the ones where the remuneration can be widest. The rule is constant: the harder a product is for the client to reprice, the larger the margin that can sit inside it.

Question 5 — Have your terms been reviewed in the last two years?

FX terms do not revise themselves. They were set at some point, often when the relationship opened, sometimes by someone no longer in post, and they survive the growth of your volumes.

A company whose currency volume has doubled in three years is generally still dealing on the terms of its volume three years ago. It is the most common situation, and the easiest to correct.

Your result

Answers	What it means	What to do
Volume below EUR 500k and plain forwards only	The stake is real but modest	Check one transaction, then revisit in a year
Significant volume, never put out to competition	This is probably the biggest item in your banking relationship	Measure three transactions, then ask for a second quote
Structured products in the book	The subject is no longer only price, but risk	Reprice each structure and check the margin-call clauses
Terms not reviewed for over two years	You are dealing on the terms of a volume you no longer have	Reconstruct twelve months of costs before opening the discussion

These situations often overlap. The second and fourth together describe most of the mid-market companies we meet.

What the test does not tell you

It does not tell you whether your bank is expensive in absolute terms — that requires measurement. It tells you whether the subject is worth half a day.

And one thing has to be said plainly: an FX margin does not show up in your accounts. It appears neither as a financial expense nor as a bank charge. It was deducted from the proceeds of the conversion before they entered the accounts. Which is why a company can pay that line for years without a single internal indicator lighting up.

Start with one transaction

Ten minutes is enough: enter the parameters of a hedge or upload your bank's proposal, and the pricer shows the gap to the market price.

Test a transaction

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Frequently asked questions

The questions finance departments ask most often on this topic

How do you know whether your bank is expensive on FX?

By recomputing a transaction's reference price from current market data and comparing it with the price applied. The gap you get is not the margin to the basis point — the market takes its share too — but it gives the order of magnitude, and that is what is missing to decide. Repeat on three or four transactions: a one-off gap can be explained by the timing of the quote, a recurring one is a pricing condition. Asking a competing institution for a quote gives the external benchmark.

Does the FX margin appear in the accounts?

No, and that is what makes it durable. It is built into the rate applied, so deducted from the proceeds of the conversion before they enter the accounts. It appears neither as a financial expense nor as a bank charge, and no management indicator flags it. Only a transaction-by-transaction reconstruction brings it to light.

Do you have to change bank to pay less on FX?

Rarely in full. The main bank provides the credit line that lets you hedge without a cash deposit, which many specialist providers require. The most common arrangement keeps the bank for long-dated hedges and puts day-to-day flows out to competition, where comparison is simplest.

How long does renegotiating FX terms take?

The groundwork takes half a day to reconstruct about ten transactions. The discussion itself runs over one or two meetings, provided you arrive with figures and, ideally, a competing quote. Without a quantified file, a renegotiation request gets an answer in principle, not a revision.