The New York Times reports that the Swiss bank was among the first to adjust its debt-trading business to the harsher realities of new Basel III regulations, so it can probably weather the 28% quarter-on-quarter revenue drop it has just suffered in this segment. Other rivals may be less fortunate.
Fixed-income trading is a two-league competition. Goldman Sachs and the five balance-sheet 'flow monsters' make up the top flight with a combined market share of about 60%. Other firms - including Credit Suisse - are scrapping it out in the second division.
At this stage of the bank reporting season, there’s little to suppose that any of the second-tier fixed-income banks are closing the market share gap in a meaningful way. Fixed-income revenue at Morgan Stanley was down 44% quarter on quarter, a bigger fall than at the Wall Street banks in the debt-trading premiership.
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