By Lawrence White
LONDON (Reuters) – Wall Street’s dominance over struggling European banks has reached record levels as U.S. firms reap the benefits of booming markets at home, while their transatlantic rivals are trapped in endless restructurings, data showed on Thursday.
The top five U.S. banks had 62 percent of revenues among the world’s leading dozen investment banks in the first quarter this year, industry analytics firm CRISIL Coalition said, while the 7 remaining European banks made just 38 percent.
As recently as 2014 the ratio was 56 percent to 44 percent, Coalition data showed, with the gap widening every year since to its widest on record since 2012. Before 2012 some different firms were included in the top-12 group surveyed.
Bank of America Merrill Lynch <BAC.N>, Citigroup <C.N>, Goldman Sachs <GS.N>, Morgan Stanley <MS.N> and JPMorgan <JPM.N> benefited from lively U.S. stock trading, with equities revenues up 28 percent on the first quarter a year ago.
This trading boom, prompted by U.S. rate rises and global economic growth that compelled investors to adjust their portfolios, drove firms including Morgan Stanley to record first quarter profits.
Meanwhile Europe’s former investment banking heavyweights are battling to find a sustainable and profitable business model, while meeting the costs of their missteps during and after the 2008 financial crisis.
Deutsche Bank <DBKGn.DE> is abandoning its global ambitions to focus on retail banking and asset management after months of turmoil that led to its chief executive’s exit.
Meanwhile Britain’s big banks, including Barclays <BARC.L> and Royal Bank of Scotland <RBS.L>, have only just completed lengthy restructurings, and are still battling litigation resulting from misconduct during the crisis.
Not all trading businesses performed well in the first quarter, Coalition said, with fixed income products continuing a recent slump. Revenues from interest rate products linked to the G10 countries fell to their lowest in more than 5 years, with weak results in all major markets except Japanese yen, it added.
(Reporting by Lawrence White; Editing by Alexander Smith)