Goldman Sachs’ fixed income woes have relegated the Wall Street stalwart to its worst ever position in a benchmark ranking of the world’s biggest investment banks.
For the first half of 2017, Goldman came joint third in the rankings compiled by industry monitor Coalition, which is based on revenue for advising on deals and fundraisings as well as selling bonds and shares on behalf of clients.
Goldman's investment bank revenue is now on a par with Bank of America Merrill Lynch and behind JPMorgan and Citigroup, which came first and second respectively.
It is the first time Goldman has been ranked lower than second since the rankings began in 2007.
In fixed income trading, where Goldman reported a 40 per cent fall in revenues in the second quarter of the year, its league table ranking fell from joint third last year to “fourth to sixth” in the first half of 2017, Coalition said.
"In a presentation at a Barclays conference last week, our president, Harvey Schwartz, acknowledged we underperformed in FICC (fixed income, currencies and commodities) in the first half of the year and outlined revenue growth opportunities of $5bn across the firm," Goldman said.
“In our investment banking business, both M&A and equity capital markets remain at the top of their respective fields, while our debt capital markets franchise continues to gain share.”
Goldman’s latest performance in FICC was worse than the average 17 per cent revenue fall across the big five US banks for the second quarter, partly because of a particularly challenging commodities market, and partly because the bank’s client base is skewed towards hedge funds and institutional investors.
Those hedge funds and institutional investors are more likely to ease off trading when market volatility is low, as it has been this year, than the corporate clients that other banks rely on for their bread-and-butter business.
The plan Mr Schwartz outlined includes strengthening Goldmans’ offering to win more business from those corporates, as well as expanding its financing business and attracting new talent.
In investment banking, which includes M&A and advising companies on raising debt and equity, Goldman held steady at joint second place with BofA, both behind JPMorgan. Goldman also retained the number one spot for global M&A.
In the European market, Goldman was overtaken by Deutsche Bank in the first half of the year. They were joint second in 2016, now Deutsche is sole second, after JPMorgan, and Goldman is third.
The news is a welcome boost for Deutsche, which has fallen steadily down the league tables since it peaked at the number two global spot in 2011. The bank was number six in the global league tables for 2016 and the first half of 2017 but Ram Nayak, Deutsche’s head of fixed income, said there were signs of progress.
“[ This year ]we regained a lot of the positions that we historically had, particularly in fixed income,” he said. “Our relative strength in foreign exchange derivatives has effectively made us stand out again and our European rates franchise has now come back to a world-class market leading franchise”.
The latest league tables show Goldman also slipped slightly down the rankings in equities sales and trading, falling from joint second in 2016 to third in the first half of this year.
- Copyright The Financial Times Limited
