European banks, which eliminated more than 140,000 jobs in two years, are poised to keep shrinking. Lenders in the region probably will cut at least 5 per cent of trading and advisory staff next year, according to a survey of three London-based investment-bank recruiters, and the reductions could reach 15 per cent, two of them said. That would be twice the 7 per cent shrinkage across the industry since 2011. European firms are lagging behind US counterparts in meeting stricter limits on leverage, putting pressure on them to cut assets. At the same time, a stagnant economy is crimping fees from investment banking and merger advice, eroding returns. That may force banks to eliminate more jobs next year, dispose of whole businesses and surrender market share in fixed income. "As European banks focus on leverage, they're losing market share to US firms," said Philippe Bodereau, the London-based head of European credit research at Pacific Investment Management, the world's largest fixed-income manager. "We're seeing a lot of banks that are starting to cut balance sheets. Cost control will remain a big item." Banks in Europe with global securities businesses, including Deutsche Bank and Barclays, posted a 13 per cent drop in third-quarter investment-banking revenue, hurt by lower fixed-income trading. That exceeded a 9 percent decline at the largest US firms. European lenders continued cutting jobs in the quarter, with bigger year-on-year declines in front-office fixed-income and investment-banking employment than US peers, according to Coalition, a London-based company that provides research on investment banks. Fixed-income headcount fell about 12 per cent at European banks in the period compared with a 7 per cent drop at US firms, Coalition data shows. Staff at advisory units fell 7 per cent compared with 4 per cent in the US. About 3,000 front-office jobs probably will be eliminated in 2014 at the 10 largest global securities firms, and the cuts could exceed 6,000 across the industry, Matt Spick, a London-based analyst at Deutsche Bank, wrote in a note to clients. Banks may exit some fixed-income businesses and will need to improve productivity in equity sales and trading, Spick wrote. He did not provide a regional breakdown. Deutsche Bank, Germany's biggest lender, and London-based Barclays are among the firms most reliant on fixed-income trading. The FICC business, which ranges from government-bond trading to providing foreign-exchange services and commodities for clients, contributed about 44 per cent of investment-bank revenue in the third quarter at both firms. By comparison, about 29 per cent of JP Morgan Chase's investment-bank revenue came from its FICC business. Deutsche Bank said it plans to exit commodities-trading businesses including base metals and agriculture. About 200 people will be affected by the measures, which include job losses or the sale of individual businesses, said a person familiar with the matter, who asked not to be identified. "Investment banking's been very challenging, and the art is to adjust cost," said Peter Braendle, a portfolio manager at Swisscanto Asset Management in Zurich. "There's still overcapacity and businesses that aren't performing well. Profitability and capital requirements are a concern for European banks." After exiting its longest recession in the second quarter, the euro area remains economically fragile. The European Union last month trimmed its forecast for growth next year in countries that share the euro to 1.1 per cent and raised its unemployment estimate to 12.2 per cent. While mergers involving companies in Europe, the Middle East and Africa are headed for the best year since 2008, reaching about US$950 billion so far in 2013, that is still less than half the record US$2.3 trillion tally seen in 2007.