Banks: Morgan Stanley FICC re-tasked

Morgan Stanley: FICC re-tasked The FICC division’s new revenue target of $1.5-2.5bn per quarter appears attainable… … but challenging.  Specifically, revenues may be impacted by RWA cuts; and we doubt the integration between Institutional Securities and Global Wealth Management will be smooth.  Our quick analysis of the balance sheet, however, indicates that FICC is already […]

Theme: Evolution of sales & trading profitability

Evolution of sales & trading profitability The sales and trading operations of the Top 12 banks have, as a group, been profitable in each of the last six years; even the post-‘Crunch’ nadir – reached in 2011 – was only 10% below 2007. In 2012, banks accelerated their adjustment to the ‘new’ trading environment.  Top performers […]

Sector: Results Review 1Q13

Results Review: 1Q13 Capital markets 1Q13 revenue of top 12 banks totalled $56bn, 6% below 1Q12.  Primary fee activities grew strongly, with the top 3 banks gaining market share in DCM bonds, securitisation, and ECM.  In sales & trading, FICC declined from a very strong 1Q12; and in equities the initial optimism proved unfounded as the overall […]

Banks: UBS Restructured

UBS Restructured  As forecast in our Oct-12 note, UBS Investment Bank has, in 1Q13, had little trouble meeting its cost/income and return on allocated equity (RoAE) targets. There is no sign that fixed income clients are deserting the bank. UBS has retained some high margin/RWA-intensive businesses in their ‘Financing Solutions’ and FICC business units.  This, […]

Theme: Investment Banks tech initiatives

Investment banks’ technology initiatives: highlights Banks’ investment in technology is accelerating as banks fight to maintain/develop edge in electronic markets; improve risk management; and achieve savings by rationalising complex system architectures. Such investment is time consuming – and costly.  Programmes announced in recent years typically boosted the proportion of tech & ops in their total […]

Theme: Capital Markets planning

Capital Markets planning: assessing outcomes Banks reviewed here met most of their ‘firm’ cost/headcount reductions and RWA/funding targets, but also largely missed their revenue/profitability targets.  This, we believe, is primarily a reflection of the turbulence in capital markets in recent years. Banks struggled to contain their costs in the early post-crisis years: only Citigroup, Deutsche […]

Theme: Global Governments

Shifting Sands of Global Government Investors From the mid-2000’s trading in G10 government bonds has been increasingly internationalised.  More recently international flows have been driven by the demands of specific client segments.  We explore some of these changes.

Theme: Correlating RQ and risk management

Correlating RQ and risk management Recent academic research suggests that measuring “RQ” as opposed to “IQ” may give a better guide to subconscious decision-making in risk management. We compare the number of self-proclaimed “Heads” among banks’ total staff and banks’ share price movement during the original ‘Credit Crunch’.

Theme: EU bonus cap

EU bonus cap The EU Parliament’s proposal to impose a 1:1 bonus:salary ratio for ‘bankers’ is not merely pointless.  Ignoring great changes that banks have already made in aligning their pay with market conditions, it damages banks’ ability to adjust their cost structures to inevitable revenue fluctuations and sidelines stakeholders that are rightly tasked with […]

Sector: Capital Markets 4Q12 Initial View

Tricumen publishes its Capital Markets Initial View for 4Q12/FY12 reporting season, comprising aggregated high-level analysis of product revenue and headcount for the world’s 11 leading Investment Banks. Highlights: In turbulent markets, the Top 11 capital markets players featured in this report actually increased their FY12 revenue by 5%, from $168bn in FY11 to $178bn in FY12.  A […]