The last quarter of 2024 saw reassuringly healthy capital markets volumes, bolstered by broadly supportive fiscal and monetary policy and a post-US elections bump. Primary revenues are recovering, while both fixed income and equities continue to thrive.
However, European investment banks are being challenged by their larger US counterparts. The top five US names are not only concentrating larger portions of revenue amongst them but also taking significant market share across fixed income and equities.
“Our concern is that US banks … are much better positioned to benefit from this favourable environment due to business and regional mix, plus potential de-regulation,” explains Andrew Coombs, an equity research analyst at Citi covering EU and UK banks.
“In equity and in fixed income, US banks have taken significant market share from the Europeans. But the other point to note is that what you’ve seen is a concentration of revenues amongst the top five names.”
Chart 1: Primary revenues continue to recover
Charts 2 & 3: European banks still losing FICC market share, but equities stabilising
Wallet share
According to Coombs, the key issue is one of scale – and while primary revenues might be recovering, the competition in secondary markets remains fierce.
