Investment banks face a rating cut if they do not devise effective capital markets strategies, after low volatility and volumes prompted a major rating agency to change its prediction of a rise in annual underwriting revenues to a 5% drop.

S&P Global Ratings, in a report published yesterday, revised down its prediction for global investment banks' full-year underwriting revenues from the slight rise it had expected six months ago. The company cited a lull in volatility that "has stifled client activity and constrained banks' revenues from capital markets activities".