The Bankwatch

Tracking the consumer evolution of financial services

Banks reliant on trading revenue will suffer

Banks whose stock value is partly predicated on trading profits will come under serious pressure in the next while.

US banks braced for slump in profits | ft.com

Trading activity picked up a little in recent days after the release of European banks’ “stress tests”. However, deepening fears of a permanent end to the trading boom that supported financial groups’ earnings after the financial crisis are prompting some banks to consider laying off traders.

“July was a miserable month for trading,” one senior banker said. “If August and September don’t rebound sharply, banks will be forced to cut jobs.”

The squeeze in trading profits highlights the rising importance of groups’ consumer and commercial banking operations, whose performance is improving as the economy heals.

From the same article I came across this statistical review of investment shifts since before and after the crisis.  It seems to show that net assets have relatively shifted to cash assets, and that equities are still 25% below 2007 values.

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Written by Colin Henderson

August 4, 2010 at 23:34

Posted in Uncategorized

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