Filling in the holes

Until recently banks have depended on fixed-income profits to fill any gaping holes in profit margins primarily caused by the slump in equities and M&A business. But, as Joanne Hart discovers, banks can no longer rely on the fixed-income sector to prop up their earnings

The new millennium has been a happy time for bond market participants. In 2000, banks delivered revenues of $20.5 billion from their European fixed-income businesses. By the following year, that figure had risen more than 26% to $25.9 billion. The change was dramatic, and all the more striking because other divisions within investment banks were performing so poorly.

Historically, fixed income had always been equity’s poor relation. The products were considered less sophisticated. The people who