Citigroup and Goldman Sachs have already told us trading income in Q2 could be down by 20-25% as very low volatility and interest rates deter client activity. Credit Suisse now tell us that litigation pain could be worse too. The team at FT Alphaville have highlighted the Credit Suisse research pointing out a total litigation bill for European banks of over $100 billion, or more than half the losses incurred in the sub-prime crisis. The CS team reckon almost $40 billion of that total does not feature in current revisions.
Is it any wonder Terry Smith has decided to step down at Tullett Prebon? The inter-dealer brokers are dependent on bank trading activity and that’s a tough station when litigation, regulation, deleveraging, low rates and low volatility are strangling your clients.
Mr Smith departs to focus on his fund management business Fundsmith and this perhaps highlights the structural shift in capital markets from trading to savings…..we wish him and his fund investors well.
View all posts by Gary →