Traders in investment banks have much to be thankful for tomorrow: after a year of often record revenues, bonuses in fixed income trading are predicted to rise by up to 45% and bonuses in equities trading are expected to rise by 25% compared to last year.
However, some banks have had a better 2020 than others. New research from banking analysts at KBW underscores the banks that gained market share in equities and fixed income trading during the first three quarters of this year, and the banks that lost it.
As the charts below show, the big gainers in fixed income (fixed income, currencies and commodities) market share on trailing 12 month basis have been Goldman Sachs, JPMorgan and Morgan Stanley. These are the banks whose fixed income traders arguably deserve the biggest increase in their end of year rewards. By comparison, fixed income traders at Bank of America, Deutsche Bank and HSBC have all lost share in 2020.
In equities sales and trading, SocGen's traders look like this year's biggest losers, but HSBC and BNP Paribas' equities traders also underperformed. Meanwhile, equities traders at Goldman Sachs, JPMorgan and Morgan Stanley again stormed ahead.
The real story this year may therefore be the growing strength of these three U.S. banks. By comparison, Citi held its ground and Bank of America lost territory. European banks performed badly at the start of the year and recovered in the third quarter.
2020 isn't over yet. KBW's analysts are predicting that market-wide fixed income revenues will rise by 0.5% year-on-year in the fourth quarter and that equities revenues will fall by 5.2%.
With a little over a month to go, any traders raising a glass to their out-performance in 2020 may also want to temper their enthusiasm with KBW's observation that this year's exceptionally strong revenues will make for challenging comparables in 2021. KBW predicts that declining volatility will reduce trading revenues next year. This could bode badly for everyone - but especially for the traders who struggled this year, when times were good.
Photo by Barbara Zandoval on Unsplash
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