The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookiesbefore using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Abigail with attitude: Deutsche and Morgan Stanley's earnings challenge

The financial landscape is changing and certain macro themes are beginning to emerge.

For several years now, the regulators have been the bugbear of the big banks. Once the world stabilized, the regulators started to crack the whip on numerous issues such as pay, capital ratios and proprietary trading. In 2013, a new ogre emerged in the form of litigation risk. This is making big inroads into banks’ profitability and it is difficult to be sure when and where such contingent liabilities will end. Bank investors should beware.

However, I can see other more positive developments. Growth is returning to most of the main economies. This will be good for the big banks. "As the economy goes, so go the banks," a hedge fund manager ruminated. As yield curves steepen, banks will be able to make money on the differential between short-term rates (where they can fund themselves) and longer-term rates (where they can lend or invest).

Also, growth implies ‘animal spirits’, which in turn means that traditional corporate finance could increase substantially. Last year there were IPOs from numerous companies including Twitter and Hilton, and blockbuster deals such as the Vodafone/Verizon transaction or the Dell management buyout.

If equity markets are buoyant, brokers are back.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?