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Deutsche Bank just issued this ominous forecast for UBS's FICC business

Bad times ahead in credit?

Surprise! Fixed income currencies and commodities (FICC) traders didn't have a great second quarter. At Goldman Sachs, FICC revenues fell 28% year-on-year in the second quarter what with 'unhealthy volatility' due to the Greek crisis. European banks have yet to report, but when they do, their FICC numbers may be worse still if Deutsche Bank's predictions are anything to go by.

In a note issued this morning, Deutsche's banking analysts predict a 32% year-on-year reduction in FICC revenues at UBS in the second quarter. At Credit Suisse, they're predicting a reduction of 20%.

Deutsche Bank's analysts aren't the only ones producing ominous forecasts for European banks' revenues this morning. Investec analyst Ian Gordon has also peered into his qualitative models and come up with a likely 10% reduction in revenues across Barclays investment bank as a result of weakness in fixed income. There's also the question of how well Deutsche's own FICC business did in Q2 - although its own analysts don't address this.

There are some glimmers of light, however. During yesterday's conference call to accompany its results, Citigroup CFO John Gerspach said the U.S. bank had a good three months in rates and FX as "investor client activity and market volatility improved." Gerspach said G10 rates revenues were particularly strong in the second quarter. The problem was 'spread products' - investment grade bonds, high yield and asset backed securities. Watch out for layoffs in these businesses as the year progresses.

(Photo credit: Clay Junell)

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AUTHORSarah Butcher Global Editor

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