"You would expect those banks that are well-capitalized and aren't in the middle of large reorganizations to probably do well," Kleinhanzl said. "That would be the Goldman Sachses, the Morgan Stanleys of the world. Those are two that could take share, those are two that remain pure investment banks."
As for the problems with trading, the issues extend beyond the low-rate, low volatility environment. The rise of high-frequency trading and other platforms has eaten into profits as well.
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"The development of electronic trading platforms and the exchanges leads a lower demand in (over-the-counter) markets which are operated by these investment banks," Lei Mao, assistant professor of finance at Warwick Business School in Coventry, UK, said in an email interview.
"When different kinds of instruments are readily available in an exchange, for example, derivatives on interest rates, investors do not need the investment banks to construct a structured product for them—they do the structuring by themselves, aided by computerized trading system(s). I would speculate that this loss of demand of structured products in OTC markets is a long-run trend, which will hit all investment banks," Mao added.
Consequently, Barclays, UBS, Credit Suisse and RBS have announced cuts to their investment banking businesses.
In Credit Suisse's case, the troubles don't stop there.
The bank is under the gun for allegedly helping its U.S. clients avoid paying taxes, with a criminal settlement looming that will see the institution pay a fine in the neighborhood of $1.6 billion.
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That won't be the worst of it though—the bank could have trouble maintaining its standing on the world stage following the guilty plea.
In a note to clients, banking analyst Dick Bove at Rafferty Capital Markets said that if news reports of the settlement are true, "at the most, the bank will never function again as a major player in the global financial system...No financial company to this point has been able to handle such charges."
A Credit Suisse spokesman declined to comment for this report. However, Chairman Urs Rohner was slated to tell shareholders Friday that the bank was working through its legal troubles.
"We are doing everything we can to resolve this matter within the given framework of U.S. and Swiss law, in the best possible way and in a timely manner," Rohner was expected to tell the Swiss bank's annual shareholders' meeting, according to prepared remarks reported by Reuters.
Bove, though, has bitterly decried the government's push against banks, citing Attorney General Holder's videotaped statement specifically as an effort to start an international "bank war."
"If the bank regulators act upon their threat to criminally indict two European banks (Credit Suisse and BNP Paribas), expect universal and investment bank stock prices to plunge," Bove said. "It may be politically desirable to do this in the United States. Not so in Europe; there will be a reaction from foreign authorities that even the United States may understand. It may finally understand that it is going too far. These two banks are definitely too big to jail. Live with it."