Study of major global banks shows Asia’s importance growing

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Fixed income, currencies and commodities – aka FICC – business is still a major revenue earner for the world’s biggest corporate and investment banks, but its contribution has shrunk since 2010 while that from equities has grown in importance, reports Coalition.

The analytics and business intelligence provider, which has offices in London, New York, Singapore and Mumbai, has issued its Corporate and Investment Bank (CIB) index for 2015. The index tracks the world’s 12 largest global CIBs across transaction banking and securities services combined with investment bank activities, comprising investment, equities and fixed income.

The 12 banks making up the 2015 index are Bank of America Merrill (BAML); Barclays (BARC); BNP Paribas (BNPP); Citi; Credit Suisse (CS); Deutsche Bank (DB); Goldman Sachs (GS); HSBC; JP Morgan (JPM); (MS), Société Générale (SG); and UBS.

Coalition reports that major banks are increasingly considering synergies between their investment banking and markets businesses with those of transaction banking and securities services, with several banks setting up a CIB structure and integrated client coverage.

Revenue across the CIB Index declined by more than 10% between 2010 and 2015. While FICC is still the largest business, its contribution has declined from 46% to 33% – partly reflecting continued weakness in credit-related products. Meanwhile equities has grown most in importance, helped by strong growth in Asia.

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Figure 1. Coalition CIB Index Revenues by Division
– Note: Numbers may not add up due to rounding. Percentages are based on unrounded numbers

In transaction banking, pressure in commodities and an emerging markets slowdown led to lower revenue in trade finance – particularly in commodities trade finance and letters of credit (LCs). Supply chain finance (SCF) outperformed due to increased client demand. The weak interest rate environment and decrease in non-operational deposits led to lower cash management revenues.

Regionally, the Americas accounted for 45% of global revenue in 2010, but has declined slightly in relative scale since then, while Asia-Pacific’s (APAC) contribution has grown to almost 20%, underpinned by the development of local economies and capital markets. Europe, the Middle East and Africa (EMEA) has remained just below 40% over the period, although with declining absolute revenue.

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Figure 2. Coalition CIB Index Revenues by Region – Note: Numbers may not add up due to rounding. Percentages are based on unrounded numbers.

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