U.S. Banks Still Eating Deutsche’s Trading Lunch

Deutsche Bank and Barclays lost market share

By Paul J. Davies

A Deutsche Bank logo in Frankfurt, Germany. The German bank is among European banks losing market shares to U.S. rivals. Photo: Reuters


Bond trading has given a big boost to Barclays and Deutsche Bank in the third quarter but the recovery isn’t nearly as spectacular as for U.S. rivals.

The difference in performance between the two sides of the Atlantic Ocean will add to the view that stronger and less distracted U.S. banks are continuing to take market share from European rivals, many of which are still restructuring and reshaping their businesses eight years after the financial crisis.

To be fair, part of the difference is geographical: European and Asian financial markets have remained more subdued this year than the U.S.

Bond trading has given a big boost to Barclays and Deutsche Bank in the third quarter but the recovery isn’t nearly as spectacular as for U.S. rivals.

The difference in performance between the two sides of the Atlantic Ocean will add to the view that stronger and less distracted U.S. banks are continuing to take market share from European rivals, many of which are still restructuring and reshaping their businesses eight years after the financial crisis.

To be fair, part of the difference is geographical: European and Asian financial markets have remained more subdued this year than the U.S.

Deutsche’s bond-trading revenues were up 14% in the third quarter from the same period last year, a much weaker recovery than at Barclays, which saw 40% growth in credit and macro revenues combined.

Barclays is much more tilted toward U.S. markets, and its numbers were in line with U.S. peers, most of whose third-quarter revenues were up by 35% to 50% from the same quarter last year. However, Barclays reports its revenues in pounds, and so got a big boost from the fall in the British currency since the Brexit vote at the end of the second quarter.

With sterling down dramatically against the U.S. dollar and the euro since the summer, Barclays credit and macro revenues might actually have fallen quarter on quarter, depending on the mix of businesses between the U.K. and U.S., and only up by perhaps 20% compared with the third quarter last year.

Numbers like these show that even with a recovery in bond trading, European banks still seem to be falling behind.

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