- With sharp declines in fixed-income revenue looking less cyclical and more secular with each passing quarter, banks like Citigroup (NYSE:C), UBS, and Deutshce Bank (NYSE:DB) are among those trying to grow their equities business.
- It sounds like a good idea, but with everyone diving into the same low-margin pool at the same time, that business is likely to come under pressure as well. The newcomers are also fighting against more established players like Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS).
- "If everyone tries to grow equities, the economics aren't going to be that great," says analyst Guy Moszkowski. "It's also not going to be easy."
- Along with razor-thin margins, launching and growing an equities trading business takes a big up-front investment that could take years to bear fruit. Will investors already grappling with low ROEs stand for it?
- They may have to as it's where the money is. Data from research firm Coalition says while bond trading revenue fell 36% over the five years ended in 2015, stock-trading revenue grew 23%.