Europe's banks keep up fight in trading battle with Wall St.

Thu May 4, 2017 9:17am EDT
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By Jamie McGeever and Anjuli Davies

LONDON (Reuters) - European banks had mixed fortunes in fixed income, currency and commodity (FICC) trading in the first quarter, but aggregate results reveal the big players were not far behind U.S. rivals.

While total FICC revenue at Wall Street's top five banks rose by almost a quarter in the period, seven of Europe's top banks together delivered 20 percent growth, data compiled by Reuters shows.

This was in large part thanks to BNP Paribas (BNPP.PA: Quote) and Societe Generale (SOGN.PA: Quote), which reported FICC gains of 32 percent and 13 percent respectively.

"The willingness to deploy leverage exposure into CIB/Global Markets is paying dividends," Barclays analysts wrote in a note on BNP Paribas, adding that the French bank's revenue performance showed it was delivering market share gains.

HSBC (HSBA.L: Quote) posted a drop in foreign exchange income, but said its rates revenues rose by 53 percent and credit revenues more than doubled.

However, the European average is inflated by a 59 percent surge at Credit Suisse (CSGN.S: Quote) which was in large part due to the low base the Swiss bank started from after making dramatic cuts to its FICC business in recent years.

And Deutsche Bank AG (DBKGn.DE: Quote), another of Europe's big trading houses, saw revenue from bond dealing rise by just 11 percent, once again from an extremely low starting point.

"As a result of our business mix and the business parameter decisions we have taken, including, in particular, the downsizing of securitized trading, we believe we benefited less in this quarter from spreads tightening as our market making inventories are smaller than those of U.S. peers," Marcus Schenck, Deutsche Bank's CFO said following its results.   Continued...

U.S. dollar and Euro notes are seen in this November 7, 2016 picture illustration.  REUTERS/Dado Ruvic/Illustration