So, maybe we were too hasty in dismissing Deutsche's strategy for doubling down in fixed income currencies and commodities (FICC) whilst other banks (Barclays) are pulling back. New research from Coalition, the analytics and intelligence company owned by Standard & Poor's suggests Deutsche's fixed income business is gaining stature, fast.
In the first quarter of 2013, Deutsche's FICC business ranked third globally says Coalition. In the first quarter of 2014, Coalition says Deutsche ranked first globally, alongside JPMorgan and Citi. Goldman Sachs' FICC business, on the other hand, ranked between fourth and sixth.
Coalition's tables are shown below. The company bases its judgments on banks' own results, minus accounting adjustments, write downs and revenues from ring-fenced proprietary trading businesses. This latter point may help explain Goldman's fixed income trading demise - the bank closed its large fixed income proprietary trading unit several years ago, but still makes proprietary fixed income 'investments' through its large investing and lending unit, which isn't included in Coalition's data.
Nonetheless, the apparent demise of Goldman's FICC market-making business relative to Deutsche's is significant. Both banks are engaged in a war of attrition and have indicated their intentions of staying in the fixed income business and picking up market share as other banks retreat.