Barclays Sees Fixed Income Trading Revenue Struggling to Recover

Nov. 10 (Bloomberg) — Europe’s biggest investment banks have yet to see a rebound in revenue from trading of fixed income, currencies and commodities in the fourth quarter, according to Barclays Plc. analysts.

“The FICC recovery does not seem to be building,” Barclays analysts led by Jeremy Sigee wrote in an e-mailed report from London today. Currency trading “volumes spiked dramatically in September, but have fallen back somewhat in October, and rates volumes have failed to follow the foreign exchange lead as might have been hoped.”

Banks benefited from currency market swings in the third quarter as investors sought to hedge against or profit from a stronger U.S. dollar and concern that Scotland would secede from the U.K.

Securities firms also saw setbacks in their equity issuance and advisory businesses last month as stock sales and merger announcements declined from a year earlier, according to the Barclays analysts. Equity trading benefited from higher activity in cash equities while derivative volumes continued their multi- year decline, they wrote.

Barclays has an equal-weight recommendation on Deutsche Bank AG as well as UBS AG and says investors should take an overweight stance on Credit Suisse Group AG. UBS, like Deutsche Bank, may experience a “financial drag” from legal expenses and regulatory penalties, the analysts said.

–With assistance from Chris Malpass in Berlin.

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