Wall Street banks have gained market share in investment banking and trading from European lenders that are still grappling with a stagnant economy and pressure from regulators to bolster capital.

Total revenue posted by the securities units of the top U.S. investment banks rose by 24 percent in the second quarter over the year-earlier period, more than twice the 11 percent gain logged by Europe’s biggest firms, among them Deutsche Bank AG and Barclays Plc, according to data compiled by Bloomberg.

U.S. banks benefited as the Standard & Poor’s 500 Index climbed to an all-time high, fueling about $710 billion of takeovers in the region, the most since 2011. A contracting euro-area economy curbed dealmaking as the sovereign debt crisis entered its fourth year and fixed-income trading income fell as the European Central Bank didn’t provide banks with additional injections of unlimited, cheap cash this year.

“The place you want to focus in terms of making money is the Americas,” said Jim Amine, Credit Suisse Group AG’s global head of investment banking, in a Bloomberg Television interview with Erik Schatzker and Alix Steel. “Europe’s fees have been on a trend down, Asia as well, but the Americas are now 58 percent of all the investment banking fees globally.”

Revenue from fixed-income, currencies and commodities sales and trading climbed 12 percent in the second quarter at the top five U.S. banks, according to Bloomberg Industries, which tracked earnings from JPMorgan Chase & Co., Goldman Sachs Group Inc., Citigroup Inc., Bank of America Corp. and Morgan Stanley. Eight European banks, including Credit Suisse and HSBC Holdings Plc, posted an 8 percent decline to $11.3 billion. The FICC business ranges from government-bond trading to arranging foreign-exchange services for corporate clients.

‘Good Times’

“European banks are FICC-heavy and make most of their money on the continent,” said Chirantan Barua, a banking analyst at Sanford C. Bernstein Ltd. in London. “The good times in fixed income are over as the heady days of loose monetary policy are at an end.”

FICC contributed more than half of the investment-bank revenue at Barclays and Deutsche Bank in the first six months of the year, compared with about 30 percent at Goldman Sachs.

Barclays’s FICC revenue declined about 24 percent to $2.1 billion in the second quarter and Deutsche Bank’s by 6 percent to about $2.6 billion, according to data compiled by Bloomberg Industries, which excludes some accounting adjustments. Deutsche Bank Co-Chief Executive Officer Anshu Jain and Barclays Chief Financial Officer Chris Lucas attributed the declines to weaker markets in Europe.

Leverage Ratio

Banks in the region are also being pushed by their supervisors to bolster equity as a proportion of total assets, a measure known as the leverage ratio. Barclays is seeking 5.8 billion pounds ($9 billion) in a rights offering next month and plans to shed as much as 80 billion pounds of assets, while Deutsche Bank raised 2.96 billion euros ($3.96 billion) in a share sale this year and plans to cut 250 billion euros of assets.

UBS AG shrank assets, excluding derivatives, by 59 percent to 841 billion Swiss francs ($915 billion) between 2006 and 2012, and plans to cut this so-called funded balance sheet to about 600 billion francs by the end of 2015. Credit Suisse, which reduced its balance sheet by 26 percent to 924.3 billion francs in the same period, plans to cut that figure to less than 900 billion francs this year.

“The U.S. firms are a step ahead in terms of capital and leverage,” said Patrick Lemmens, who oversees about 30 billion euros at Robeco Groep NV in Rotterdam. “As European banks are expected by investors to show improved profitability, capital and leverage ratios, they are shedding the least-profitable businesses, but this still leads to lower revenue.”

UBS Cutback

UBS is scaling back its debt-trading operations, while Royal Bank of Scotland Group Plc said in June it will exit structured retail products and equity derivatives operations. That’s helping some European banks to pull ahead of their U.S. competitors under one measure of profitability: return on equity. Credit Suisse’s ROE for 2013 will surpass Goldman Sachs and Citigroup and be second only to JPMorgan, analyst estimates compiled by Bloomberg Industries show.

U.S. banks are under pressure to get out of some commodity- trading businesses. The Federal Reserve said it will review a decade-old decision to allow lenders to own and trade raw materials and a U.S. Senate subcommittee questioned witnesses about the potential dangers of the current policy. JPMorgan said on July 26 it’s reviewing a potential sale or spinoff of its physical commodities unit.

U.S. Market

U.S. firms received 33 percent of all fees globally for stock offerings, mergers advice and bond underwriting in the second quarter, the most since 2008, while western European banks attracted less than 30 percent, according to Freeman & Co., a New York-based research firm.

“The problem for the Europeans is the U.S. market is intrinsically more profitable,” said Philip Keevil, a partner at Compass Advisers Group LLC, which has offices in London and New York. “Spreads on underwriting are greater, the high yield and initial public offering markets are more consistent and the mergers and acquisitions market is more robust. Added to the fact the U.S. recovery is under way versus anaemic recovery in Europe, it all comes down to U.S. market share.”

While bond sales by European issuers outpaced sales in the U.S., fees in the region were less than half. In Europe, borrowers raised $567 billion in the second quarter, paying an average fee of 0.19 percent. In the U.S., bond sales reached $492 billion for a fee of about 0.51 percent, according to data compiled by Bloomberg. U.S. firms dominated their home market, with Deutsche Bank being the only European firm to figure in the top five. In Europe, HSBC, Deutsche Bank and Barclays were the top bond arrangers, followed by JPMorgan.

Stock Offerings

The five top arrangers of stock sales globally — all U.S. firms led by Goldman Sachs — boosted their combined market share to 44 percent from 43 percent in the first half compared with the year-earlier period, data compiled by Bloomberg show. European firms dropped out of the top five equity underwriters last year, the data show.

In North America, the pace of mergers climbed 6 percent with companies announcing $710 billion of takeovers this year; in Europe, it slowed 1.4 percent to $495 billion, according to data compiled by Bloomberg.

European Banks

European banks haven’t made it to the top three advisers for deal-making in North America since 2011, according to Bloomberg data. Bank of America, JPMorgan and Goldman Sachs are the top arrangers on takeovers in the region this year. In Western Europe, Goldman Sachs, Morgan Stanley and JPMorgan were the top mergers advisers. European banks were left out when Nokia Oyj agreed to buy Siemens AG’s share in a phone-equipment venture for 1.7 billion euros in July. JPMorgan, Morgan Stanley and Goldman Sachs advised on the deal, Bloomberg data show.

“U.S. banks made the right strategic choices immediately after the crisis with decisiveness” by cutting jobs, exited unprofitable units and selling assets, said Claudio Scardovi, a managing director at AlixPartners LLP, a financial advisory firm. European lenders will need to cut costs further and abandon businesses where they lack market share, he said.