US investment banks aren’t putting money on a
roll-back of regulation according to Barclays analysts.
The firm’s equity research team met with
several top executives in New York recently.
Many of them were somewhat cautious on taking hard actions
to benefit from any putative steps at deregulation from the new
"In particular, moving back into proprietary trading does
not seem to be on the agenda for many firms," wrote Kiri
Vijayarajah, financial analyst at Barclays.
"Some legislative change remains somewhat up in the air
(e.g. the Department of Labor’s Fiduciary Rule),
making it hard for firms to provide much clarity around the
The executives were generally upbeat about current business
trends in capital market exposed businesses.
However, one firm did flag the softness in M&A as well
as the declines in global equity trading volumes.
Another concern from investors was how the credit businesses
would perform in an environment of higher rates.
For the European executives, Barclays says the drivers of
the improved rates activity – namely divergent and
changing monetary policy across the globe – suggest
the upturn has further to run.
More important than the near-term revenue uplift was the
confidence around franchise health that the European firms were
keen to communicate.
Less discussion around re-pricing
Compared with meetings in March 2016, Jason Goldberg, senior
equity analyst at Barclays, said the team was struck by the
limited discussion around re-pricing balance sheet usage,
particularly at the trade level.
"This may be because much of it is now done and in the
numbers, e.g. in prime and repos.
"It might also be because the focus at the moment is on
capturing the volume upturn rather than fighting customers on
price," he added.