| "Morgan Stanley and UBS absolutely missed the low-hanging fruit of 2009 but they cannot cede that business to their competitors" Steve Stelmach, FBR Capital |
Earnings results for the fourth quarter across Wall Street confirmed the continuing decline in fixed-income trading revenues. JPMorgan, in particular, reported large declines in revenue for the quarter. Its fixed-income trading business brought in just $2.7 billion – in the previous three quarters revenues had been around $5 billion. Goldman Sachs, which led Wall Street in FICC trading over the first three quarters of 2009 also posted a substantial drop, with revenues of $3.97 billion for the final quarter, down from almost $6 billion in the previous quarter and more than $6.5 billion in each of the first two quarters.
A decrease in volumes over the period, rather than narrowing bid-ask spreads, lay behind much of the drop-off. Not wanting to risk the strong capital gains secured earlier on in 2009, many investing clients scaled back their activity in November and December, say bankers.
Cash cow dries up
Fixed-income trading was a cash cow for many banks in 2009 but some analysts say that game is now over.
