Investment banking strategies among the major European players are too homogeneous, a HSBC analyst warned on Thursday.

In a research note to clients, equity analyst Al Alevizakos, said that “management are running out of ideas” and plans to improve profitability across Europe have struggled.

“We note the lack of diversity with European banks aiming to invest in capital-light equities and optimise the capital usage on certain fixed income, currency and commodity (FICC) products,” said Alevizakos, associate director of European banks research in HSBC's Global Banking & Markets division.

"Other products, such as prime services, are being negatively affected by the increasing leverage ratio requirements."

Since 2009, HSBC's research shows European peers have underperformed their US counterparts in terms of revenue growth.

As of 2015, the five biggest EU wholesale banks (Barclays, BNP Paribas, Credit Suisse, Deutsche Bank and UBS) are all in restructuring mode.

Certain players in the field, including Barclays, have already performed significant deleveraging.

Other market participants have already reduced their portfolios substantially, such as Royal Bank of Scotland and Commerzbank.

Alevizakos' research focuses on UBS, Credit Suisse and Deutsche Bank - all of which have been hit since 2012 with major settlements for Libor, Forex and US sanctions.

HSBC has also been hit with multiple fines and been shrinking its own investment bank, which includes bond- and stock-trading operations, as part of a plan to cut as much as $5bn in costs by the end of 2017. 

In his note to clients, Alevizakos says he prefers Credit Suisse as an investment due to the banks' earnings growth potential through restructuring and lower litigation costs.

He is cautious on Deutsche Bank and sees several negative short-term catalysts on litigation and weak investment banking  revenues.

HSBC estimates that Credit Suisse and Deutsche Bank will have 5% and 9% lower investment banking revenues by 2020 compared to 2014.

The decline in revenues stems from fixed income deleveraging and market trends to be favourable either. 

UBS could buck the trend, he reckons, but this is mainly because it has already completed the lion’s share of its restructuring, reducing its revenues.

Nevertheless, HSBC only expects 1.2% growth through to 2020, which is hardly exciting.