Bond Trading Gains for First Time Since 2012

The world’s biggest investment banks increased sales from trading bonds for the first time since 2012, relieving pressure on the leaders of troubled European lenders as they pushed through job cuts and overhauls.

The 12 biggest investment banks, ranging from Goldman Sachs Group Inc. to Barclays Plc, increased fixed-income sales 9 percent to $75.9 billion last year, according to a report from Coalition Development Ltd. The hike also eased the pain of a slump in stock trading and advising clients on mergers, acquisitions and underwriting, both of which fell to the lowest since 2012, the report shows.

Banks benefited in 2016 as clients rushed to wager on the direction of the U.S. economy under President Donald Trump and the British vote to exit the European Union while also making more bets on high-risk debts. The surge enabled the markets units at lenders including Deutsche Bank AG and Credit Suisse Group AG to eke out profits as their chief executive officers exited businesses, fired thousands and reduced assets.

Sales from ‘G-10 Rates,’ which include products tied to interest rates in some of the world’s biggest economies, jumped 26 percent to $25.9 billion, the most since 2012, Coalition data show. The surge enabled some to make outsize profits: A team of Citigroup Inc. traders dealing in U.S. dollar interest-rate swaps, a kind of derivative, generated about $300 million in revenue, Bloomberg reported in October.

Credit Trading

Revenue from credit climbed 20 percent to $14.8 billion as clients boosted wagers on distressed debts and Asia-Pacific bonds, according to the report.

Credit Suisse, which lost hundreds of millions of dollars on soured-debt assets a year ago, increased credit-trading sales at its global markets unit by 66 percent in the fourth quarter. Barclays Plc, run by ex-JPMorgan Chase & Co. executive Jes Staley, boosted bond-trading sales 33 percent to 766 million pounds ($955 million) for the fourth quarter, the London-based lender said Thursday. The bank cited its U.S. credit-trading business and a strong performance in rates.

The gains didn’t dent the pace of firings across the sector, the data show. Banks reduced the number of fixed-income traders on their desks by 7 percent to 17,500 in 2016, almost double the rate of cuts a year earlier. The firms have culled almost one in three bond traders since 2011, according to the Coalition report.

Other kinds of fixed-income trading declined. Commodities products slid 7 percent to $4.3 billion, almost half what they generated in 2011. Products tied to the 10 most-heavily traded currencies fell 6 percent to $9 billion as hedge funds made fewer foreign-exchange wagers while emerging-market products slipped 8 percent to $12.3 billion, the data show.