Citi targeting market share gains in equities in 2015

[LONDON] US bank Citigroup is targeting market-share gains in equities in 2015, its European head of equities told Reuters, pointing to fresh technology investment and new hires as financial-market trading picks up.

The comments echo a more optimistic stance from trading desks at global investment banks after a bumper quarter boosted by the European Central Bank's announcement of a bond-buying scheme to spur growth.

They contrast with last year's more lacklustre picture of the stock-trading industry, particularly in Europe, with tepid volume growth and increased regulatory scrutiny squeezing trading commissions and stoking fears of more cutbacks. "We are not pulling back in equities - quite the opposite," Citi's Tim Gately said in an interview. "We continuously invest in technology, have made a number of senior hires and expect to grow our market and wallet share in 2015." Citi is making a push for a bigger share of spending from top clients and hedge funds, Gately added.

In an era of tighter balance-sheet rules and cost cuts, banks in general are taking a more targeted approach to client lists when allocating resources, seeking to squeeze more revenue out of top clients in a competitive industry.

First-quarter equities revenue grew at double-digit percentage rates for a number of US banks including Morgan Stanley and JPMorgan, though Citi bucked the trend with a 1 per cent decline in the quarter.

The pick-up was also broadly felt in Europe, with Germany's Deutsche Bank unveiling a new plan to invest more in its small but growing equities trading division.

Trading conditions for the industry are set to stay positive, said Gately, thanks to near-zero yields in much of the bond market, which made equities more attractive to investors. "The first quarter was not just a blip (for the industry)," he said.

Citi and Deutsche are traditionally more dominant in fixed-income trading. Research firm Coalition ranked Citi in the bottom third of the top 10 banks for global equities in 2014, with Deutsche Bank in the middle tier.

Citi management said in the fourth quarter it would "take actions" to turn around its underperforming EMEA equities franchise. Among new hires, the bank has named Murray Roos as its new London-based global head of sales for equities and prime finance and Emmanuel Girod as global head of exotics trading.

Some have warned, however, that the spreading ripples of optimism in equities may be a case of market-driven bullishness than a new dawn for the highly automated, high-return, but also volume-dependent world of trading stocks.

Banking sources told Reuters they still expected some smaller players to cut back or exit the equities business given the competitive pressures, though improved trading conditions had allowed for some easing of pressure.

REUTERS