Author: Anatol Antonovici
Senior Reporter
Anatol Antonovici

12 Largest Investment Banks Had Worst H1 in 13 Years

The largest investment banks in the world had their worst H1 performance since 2006, according to Coalition, a business intelligence provider in the financial markets. On Thursday, the industry analyst said that the 12 largest investment banks in the world saw their revenues decline by 11% in the first six months of the year, which is the worst result in 13 years.

US And European Investment Banks Struggle Amid Geopolitical Tensions

Equities trading caused the most damage, declining 17% year-on-year, to $22.1 billion. Foreign exchange, bonds, and commodities revenues declined by 9%. Investment bank advisory fell 8% during the same period.

The twelve banks tracked by Coalition are JPMorgan, Bank of America Merrill Lynch, Barclays, Citi, Credit Suisse, Goldman Sachs, Deutsche Bank, HSBC, Morgan Stanley, UBS, BNP Paribas, and Societe Generale.

The banks’ profitability weakened as well. Operating margins fell 500 basis points to 31%, which is the lowest since 2015.

Some of the banks cut jobs and have implemented massive restructuring in their investment banking units as a reaction to poor revenues. Deutsche Bank, HSBC, and Citigroup have all announced plans to cut jobs.

Earlier, it was reported that Deutsche Bank was about to cut as much as 18,000 jobs, most of which affect the investment banking division.

Year-to-date, the 12 banks managed to cut 1,500 top jobs, which is the highest figure in about five years. Trading positions were the most targeted ones. The combined front-office jobs fell 3% in H1 2019 to 50,400.

The equities divisions at the banks have lost 800 executives, while fixed-income units cut 600 roles.

Besides Deutsche Bank’s massive overhaul, Barclays has cut 3,000 jobs since January. Elsewhere, HSBC said that it would trim 5,000 jobs, mostly senior positions. Also, Societe Generale announced that it would cut 1,600 roles.

Commodities Revenue Fell 1%

Revenues from commodities trading fell only 1% in the first six months of the year compared to the first half of 2018. The decline was caused by the power and gas markets, Coalition stated in its report.

Last year, commodities-related revenue at the 12 banks bounced back from 2017’s lowest level in over ten years. The recovery was driven by the same power and gas industries, along with base metals.

Since the financial crisis in 2008, investment banks have departed from commodities businesses. The commodities revenue at the banks fell from $15.9 billion in 2008 to only $3.6 billion in 2018. The main reasons behind the tumble were tighter regulation and lower volatility.

In the first half of this year, revenue from commodity trading and commodity-related derivatives was $2 billion, Coalition said. The analyst added:

Oil revenues increased significantly, however power and gas declined due to fewer large structured deals.

Meet The Author
Anatol Antonovici
Anatol Antonovici
Senior Reporter

Anatol has been writing for our news site for a year and is the newest member of our team. While he’s new to us, he’s certainly not new to trading with over 10 years’ experience being a professional financial journalist and working in the markets. Learn more.

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