Lunchtime Links: Is Goldman Sachs really losing its FICC touch?

Bloomberg thinks it's onto something. It's been looking at Goldman's results and talking to a few analysts and notes that Goldman lost a lot of market share in FICC in the third quarter.

Specifically, the firm's share of FICC revenues slipped to 19% in Q3, down from a high of 23% in 2009. At the same time, Goldman cut VaR 42%, to the lowest level since 2006. "Their outperformance has declined," concludes Roger Freeman, a banking analyst at Barclays Capital.

Clean figures from analysts at Nomura appear to confirm this: while Goldman's FICC revenues fell 43% in the third quarter, the market average revenue decline was just 22%. Citigroup actually increased its revenues in its FICC business by 12%.

Long term, however, Goldman really should remain the king of FICC. A report last week by analysts at Morgan Stanley (based on revenues in the first seven months), showed Goldman having the highest FICC revenue share, and the FICC revenue share with the least variance. "Q3 clearly showed the advantage of being a flowmonster," MS analysts claimed.

As the biggest FICC 'flowmonster', Goldman ought to reap the biggest advantage long term. UBS's complaints that it's not even getting, 'crumbs from the table' of big players during periods of low volume appear to bear this out.

Source: Morgan Stanley

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