At Goldman Sachs - usually the firm to buck the trend - fixed-income net revenues were 37% lower (comparing third quarter 2010 with third quarter 2009) at $3.8bn while equities revenues were 33% lower at $1.9bn. Other houses reported falls in sales and trading revenues from equities, fixed income, currencies and commodities.
It is difficult not to conclude that wholesale banking has entered a lower returns era unless the legendary inventiveness of its bankers finds a new pot of gold that the regulators either have not noticed or are comfortable with.
The more complex and lucrative structured products have lost their appeal although basic securitisation is making a comeback, as illustrated by Investec's sterling subprime-backed deal and a securitisation done by UK mortgage lender Nationwide - both deals featured in this issue.
Investors are risk averse and unwilling to take bold principal positions while regulators are demanding much higher capital for anything other than plain vanilla transactions. The problem with plain vanilla deals is that banks need a lot of them to justify their huge cost bases. At present, with the markets in turmoil, this in not happening and there is little around to pick up the slack.
Back in 2006, at the height of the market boom, investment banking delivered returns on equity of nearly 30%. Now some analysts are forecasting figures at half this level. If that is the secular trend - to use a favourite banking term - some tough decisions on costs and salaries lay ahead. In fact, after all the rows about bankers' bonuses it may be the market that performs the necessary correction in the end.
