Investment banks have been reducing headcount in their European Equities Departments as a result of decreasing profitability because of the ongoing Eurozone debt crisis. Trading commissions are being reduced because of the rise of electronic execution firms. The daily average capitalization of stocks being traded in European markets have fallen 58% since 2007. Unlike US stocks, European commissions are calculated based on the capitalization multiplied by a basis point rate. They are not based on the number of shares. The average rate in 2009 was seven basis points. In 2006, it was nine basis points. Total trading commissions have gone from 10.7 billion Euros in 2008 to 8.9 billion Euros in 2011 according to the Tabb Group.
Europe's top traders were Credit Suisse, UBS, Morgan Stanley and Deutsche Bank. They have approximately 8% to 11% of the business in 2010. Regionally, Europe was 35% of the banks' revenues. The US accounted for 55% and 10% was from Asia. Banks that have laid off equities staff include Unicredit, Bank of America, Credit Suisse, UBS, Royal Bank of Scotland and Nomura. One firm bucking the trend is Barclays. They are not reducing their European Equities staff.
Some alternative business models include specialization and outsourcing. Mediobanca added an eleven person team in London that covers financial stocks. Unicredit hired Kepler Capital Markets to provide sales, trading and research for some stocks.
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