* Credit Suisse also says sees slowdown in parts of fixed
* Two banks add to warnings from U.S. rivals
* Industry has been under pressure since financial crisis
By Maya Nikolaeva
PARIS, March 13 Deutsche Bank said on
Thursday it has had a "slow" start to the year in its investment
bank, due to market uncertainty related to the crisis in Ukraine
and concerns about economic growth in China and Germany.
Credit Suisse also said it had seen a slowdown in
parts of fixed-income trading, adding to warnings from U.S.
rivals JPMorgan and Citigroup that this year has
got off to a weak start for investment banks, continuing a
slowdown seen in the second half of last year.
"To us, the year started slow. Obviously through political
uncertainty we started to have market uncertainty again and a
slowdown in business," said Stefan Krause, chief financial
officer at Deutsche Bank, Germany's biggest bank by market
"Ukraine, the data from China caused some slowdown ... We
had some ups and downs in Germany on data as well," Krause told
reporters on the sidelines of a banking conference in Paris,
organised by The Economist magazine.
Credit Suisse also said some business areas had slowed.
"We have seen a slowdown in certain parts of fixed income,"
said Gael de Boissard, Credit Suisse's head of investment
banking and CEO for Europe, Middle East and Africa.
Revenues from fixed income - especially rates - have slumped
since May, blamed on tougher regulation and a move by the U.S.
central bank to put the brakes on its bond-buying programme.
While some banks say the fall is temporary, other bankers
and analysts say requirements to hold more capital has squeezed
margins and left overcapacity, and banks will need to cut
hundreds of jobs to shrink and restructure.
Last year's drop in investment banking revenues and hefty
fines for past wrongdoing hit profitability across the industry,
which has been under pressure since the financial crisis.
Krause said banks should be able to generate profitability
above the cost of capital and funding from investors in 12 to 18
He said most of what Deutsche Bank currently earned was used
to deal with "the sins of the past".
"We hope that starting in 2015 most of the increased expense
is behind us," he said.
However, UBS's Chief Executive Sergio Ermotti said
on Thursday getting returns back above the cost of equity -
which is typically 10-12 percent for banks - could take longer.
"I am not so sure that there is a 12 to 18 months solution,"
"Without GDP growth, without the economy growing in a
sustainable and predictable way that allows clients and people
to get less concerned and the interest rates to grow where they
should grow, it is very unlikely that we will see a return of
profitability in the banking industry that would justify the
cost of equity," he said.
Krause said Deutsche Bank still sees positive results for
the whole year.
But his comments add to concerns that revenues in the first
quarter, often the most lucrative for investment banks, will
suffer from continued slow trading in fixed income, which makes
up half of investment banks' revenues.
Citigroup said last week its first-quarter bond trading
revenue would be down by the "high mid-teens" in percentage
terms from a year ago due to economic uncertainty and JPMorgan
said on Feb. 25 its markets revenues were down 15 percent on the
Revenue in the first quarter from fixed income at Europe's
investment banks is set to fall 20 percent from a year ago,
analysts at Morgan Stanley estimate. Deutsche and Barclays
would be hardest hit as they have the biggest bond
trading businesses in Europe, and they appear to be losing share
to U.S. rivals.
Revenues from fixed income, currencies and commodities last
year fell by an average of 10 percent across the top dozen
banks. By comparison, equities income rose 17 percent last year
and advisory revenues grew by just over a tenth on average.
Morgan Stanley said equities income for Europe's banks in
the first quarter was likely to be up 4 percent and advisory
revenues down 6 percent on the year, leaving overall investment
bank revenues down 10 percent.