Banks feel squeeze after fixed income trading revenues drop

INVESTMENT banks have experienced radical declines in their fixed income trading divisions in the past three months, figures show.

The biggest investment banking names in Europe and the US have witnessed double-digit falls in their fixed income, commodities and currencies (FICC) trading arms, once the heart of their investment banking operations.

A combination of weak client demand, poor market performance and regulation barring proprietary trading has left banks nursing sharp falls in income compared with 2010.

Credit Suisse saw FICC revenues plunge 59 per cent year-on-year to just 595m Swiss francs (£460m) in the second quarter while Goldman Sachs, once Wall Street’s dominant player, posted a 53 per cent slide.

The fall in revenues since the financial crisis is yet more dramatic. In the third quarter of 2009 Goldman’s FICC revenues were $6bn (£3.6bn) but these fell to $3.97bn in the final quarter of that year and have dropped steadily to just $1.6bn in the second quarter.

Banks are clear that this will translate into job losses. Both RBS and Credit Suisse outlined plans to cut 2,000 jobs apiece after their first-half results.