London, 3 November 2026 — EBM Newsdesk Analysis — By Brad Adams
The third quarter was hard on bond traders everywhere. But Wall Street had a way out. Europe’s banks did not.
Fixed income, currencies and commodities trading, known in the industry as FICC, fell on both sides of the Atlantic as interest rates swung violently. US Treasury yields hit multi-decade highs, and Morgan Stanley’s finance chief said rates “rose pretty furiously throughout the third quarter”. Clients pulled back, credit spreads widened and deal flow slowed.
The difference is what happened next. In the US, a boom in equities trading more than made up for the weakness in bonds. In Europe, there was no comparable boost.
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On Wall Street, the bond figures were weak but manageable. JPMorgan’s FICC revenue fell 4% to $5.4bn, Goldman Sachs was roughly flat at $3.47bn, and Bank of America suffered a 17% drop.
Equities told a different story. Goldman’s equities revenue rose 72% to $6.44bn, JPMorgan’s 49% and Morgan Stanley’s 41%, driven by prime brokerage, derivatives and financing for hedge funds. It is the trading boom that war-driven volatility had promised.
Europe’s banks rely far more heavily on fixed income, so the bond slump hit harder. At Barclays, FICC revenue fell 19%. Its equities business helped, but not enough to close the gap. Deutsche Bank, Europe’s biggest bond trading house, held up better, with FICC down 3% and investment bank revenue down 2%.
Not All Bad News
There were bright spots. Bloomberg reported that BNP Paribas’s equities desk outperformed US rivals, and both BNP and Deutsche saw smaller bond declines than some American banks. Several European lenders beat profit forecasts last week.
But the overall picture is clear. Wall Street’s biggest banks are larger, have more capital and have a deep base of hedge fund clients. When markets reward equities and financing, they win. It is the same imbalance that left no European bank among the 21 banks on the SpaceX IPO.
Investors Want Less Trading, Not More
European bank investors are sending a clear message: they prefer steadier businesses. Both Deutsche Bank and Barclays have lagged the wider European bank index this year and trade below the 1.5 times tangible book value that Europe’s large banks average. Santander, whose investment bank uses less than 20% of its risk-weighted assets, trades above 1.6 times.
That is why Barclays wants to cut its investment bank’s share of risk-weighted assets to 50% by 2028, and why Deutsche is expected to bring its share down to around 40%. Both banks are cutting costs elsewhere too. HSBC has been shedding senior bankers, while UBS has shown that a strong trading quarter can still win over investors.
The Bottom Line
Europe’s banks cannot beat Wall Street at its own game, and they should stop trying. US banks have the scale, capital and clients to dominate equities and financing. Europe’s lenders do better when they focus on what they are good at: corporate banking, payments and steady lending. For investors, the lesson is the same one Europe’s stock market has been teaching all year: steady returns can beat flashy ones.
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