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Both big Swiss banks in recent years have been cutting back on their investment banking operations, but in the corona-year, the business generated huge money. This presents the management of the banks with a set of delicate decisions to take.

The most fees since the turn of the century – a record achieved by investment bankers in the past year, in every month bar March and November. The major banking institutions of this world raked in $126 billion in 2020, according to an estimate by Refinitiv. The figure is 18 percent above the like-for-like figure of 2019, which means that 2020 was a fantastic year for traders and dealmakers.

This begs the question: was it a one-off or is investment banking in for a revival, boosted by volatile financial markets?

Voluntary Relinquish

If this were to be the case, the two big Swiss banks are faced with a number of intricate decisions to take. Both UBS and Credit Suisse (CS) have cut back the volatile and capital-intensive business in favor of wealth management – voluntarily forgoing their advantageous position in the market. The way back to the top would appear rather arduous.

But even before answering the big-picture questions, bosses are going to decide on the eagerly awaited bonus awards due in February. If the management were to judge by the money generated by investment bankers alone, bonus pools would have to be full to the rim. But, of course, the pandemic requires a sensitive approach to this dicey issue.

Trading Tops the List

And yet it is trading, the Achilles heel of banking during the financial crisis, that paid off in the year of corona. Refinitiv estimated that investment banks had earned $32.5 billion in equity trading, a whopping 79 percent more than in the year-earlier period. Fees from the trading in interest-carrying securities added by a quarter to $42.9 billion. Equally a top-notch figure if seen over the past two decades.

The banks were less successful in the core business of mergers and acquisitions, frozen as it was in the first half and not fast enough to recover in the second. The units made $30.4 billion in fees last year. CS and UBS made it to positions six and seven in the Refinitiv league table.

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