The world’s top 12 investment banks continued to reap the rewards of volatile markets and client activity, posting their highest combined first-half revenue in a decade, according to the Greenwich’s Coalition latest sector index.

Despite further normalization of trading in Fixed Income, Currencies and Commodities, or FICCs, during the first six months of 2021, the total The investment banking income jumped 10% year-on-year to $ 115.3 billion, the data showed. However, the slowdown in the FICC will likely weigh on the performance of banks for the year 2021.

Coalition Greenwich, a research firm of S&P Global Inc., tracks income data from Bank of America Corp. Investment Banking, Citigroup Inc., The Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley, Barclays PLC, BNP Paribas SA, Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings PLC, Société Générale SA and UBS Group AG.

Treble H1 & Archegos effect

Excluding losses related to the bankruptcy of the American family office Archegos Capital earlier this year, first-half equity trading income jumped 42% to $ 32.2 billion, reaching its best level in a decade. Another decade high was seen in the investment banking divisions of the 12 banks, or IBDs, which combine stock and debt underwriting, Mergers and acquisitions advisory and origination services. IBD’s first-half revenue increased 38% year-on-year to $ 33.8 billion.

Including losses from Archegos, first half equity trading income was 11% higher than a year ago, mainly due to a resumption of trading losses recorded by some banks ago. is one year old. French banks have been hit hard by the turbulence created by the pandemic in 2020, as companies canceled dividends, which affected banks’ structured derivatives activities. The recovery of French banks in the second quarter was one of the main drivers of equity income growth in Europe.

Dark prospects for the IFCC

As the year progresses, the weaker FICC results are likely to weigh more heavily on the total revenues of the banks in the sample, with the negative effect already visible in the second quarter, when growth in equity trading and IBD income was insufficient to offset the 39% year-on-year decline in the FICC.

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During FICC’s first half of the year, revenues generated from trading G-10 rates, G-10 foreign exchange, credit and emerging markets products slowed, while revenues from commodities and securitization products increased. Second-quarter FICC revenue fell due to lower flow product trading, tighter spreads and lower volatility, Coalition Greenwich said.

This trend continued into late summer, according to Michael Turner, CIB Analysis Manager at Coalition Greenwich. “The third quarter was noticeably slower, with lower client volumes, lower volatility and staff turnover,” Turner told S&P Global Market Intelligence. The biggest drop was recorded by FICC, while the results of stock trading were more mixed, he said. IBD’s revenue has remained resilient so far, supported by a large M&A backlog, Turner added.

Deutsche Bank investment banking chief Mark Fedorcik made similar comments on IBD’s performance, saying the group has registered “Robust activity” in its financing and origination and advisory activities in the third quarter.

Number of heads

Hiring and firing trends at the banks in the Greenwich Coalition sample were dynamic in the first six months of 2021, with equity offices losing the most jobs and registering more departures at senior managers than middle and junior managers, said the Greenwich Coalition. .

Staff reductions in FICC were mostly seen in European banks, while their US peers sought to hire staff in spreads. The FICC’s Asian trading desks have recruited new people thanks to banks’ investments in China, the research firm said.

IBD’s headcount increased slightly, mainly due to an increase in hiring at US banks, while hiring trends at European banks were mixed.

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Coalition Greenwich is a business division of CRISIL, which is part of S&P Global Inc.