UBS was the biggest winner in advisory and underwriting, posting a 42% year-on-year rise in fees, with a strong performance in equity underwriting in particular.
Barclays said its banking fees from such advisory work rose 15% to £2bn in the third quarter compared with the same period a year ago, against a 14% decline in income from the bank’s trading division.
“In corporate and investment banking advisory and debt underwriting we are actually doing quite well, we’re 6th in the US and first in the UK, so it’s the markets business we need to put additional focus on,” Barclays chief executive Jes Staley said on Monday.
Credit Suisse saw advisory, underwriting and financing revenues in its Asian business rise 10% to 148mn Swiss francs ($148mn), thanks mainly to bond issuance by Asian companies.
Banks were helped by a bumper year to date for new equity issuance, with global initial public offerings up 29% year-to-date to $143bn, according to Thomson Reuters data.
The strong performance by European lenders’ investment bankers contrasted with a tough quarter for their colleagues on the trading floor.
Europe’s top investment banks saw revenues from fixed income, currencies and commodities (FICC) trading fall even more than their Wall Street rivals in the three months to end-September.
FICC revenues fell by more than 30% at UBS, Deutsche Bank and Barclays and 26% at BNP Paribas, compared with a 22% average decline at US rivals according to Thomson Reuters/IFR data.
The global slump in FICC revenues came from investors’ reduced appetite to trade compared with 2016, when Britain’s vote to leave the European Union and the US election led to market turbulence and therefore to trading opportunities.
US banks were also buoyed in the third quarter by a stronger performance in investment banking than in trading, outdoing their European rivals.
Investment banking revenues at the five Wall Street banks rose on average 8% in the third quarter versus an average 2% drop for 8 European banks who have now reported earnings, according to Thomson Reuters/IFR calculations.
US lenders occupy the top five spots for advising on global mergers and on global equity deals so far this year, Thomson Reuters data show, with Credit Suisse muscling in at 6th place on the former while UBS occupies the same spot in the latter.
The poor overall performance of European investment banks comes at a difficult time for their bosses, with several of them ploughing on with investment into the underperforming businesses amid investor scepticism.
Credit Suisse chief executive Tidjane Thiam on Thursday underlined his determination to keep the group’s investment bank in the face of a campaign by a hedge fund investor for Switzerland’s second-biggest lender to ditch the unit.
The third quarter performance gave some vindication for Thiam as the lender’s FICC revenues fell by only 14%, much less than at rivals UBS and Barclays.
Some Barclays investors and analysts are also sceptical of Staley’s plans to invest more in the lender’s trading division.
“We have made no secret of our aversion to Barclays’ strategy, which in our opinion is reliant on little more than a speculative revenue recovery in the low-return Markets business,” analysts at broker KBW said.
Notable in avoiding the trading slump was Asia-focused HSBC, Europe’s biggest bank by market capitalisation, which posted only a 5% decline in FICC revenues and saw equities income increase 30% on the back of growth in its prime broking business, which serves hedge funds.
A sign hangs above the entrance to the UBS headquarters in Zurich. UBS was the
biggest winner in advisory and underwriting, posting a 42% year-on-year rise in fees, with a strong performance in equity underwriting in particular.