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* Q1 revenue falls to $42.8 bln (2013: $46.9 bln)
* Fixed income, currencies and commodities revenue down 16pct
* Q1 Revenue at equity divisions drops 3 pct
* Q1 Revenue for advisory on deals up 4 pct
LONDON, May 19 (Reuters) - Revenue at the world's 10 largestinvestment banks fell nine percent to $42.8 billion in the firstquarter, new data showed on Monday, as tough new rules forcingbanks to hold more capital led to a retreat from riskier typesof trading.
Trading in fixed income, currencies and commodities (FICC)divisions fared the worst, with revenue down 16 percent to $22billion, compared with $26.1 billion a year earlier, accordingto consultancy Coalition.
Regulations brought in after the financial crisis thatrequire banks to build up capital buffers to cover their riskyassets have hit interest rate trading desks hard, sendingrevenue 19 percent lower in the first three months of the year,while a lack of volatility led to a 26 percent decline inforeign exchange trading, Coalition said.
Investment banks are reshaping themselves to increase theirprofitability and a number, including Deutsche Bank and Barclays have made cuts to FICC divisions to dealwith weak volumes and the new regulatory environment.
Barclays said earlier this month it would cut 19,000 jobs,with 7,000 coming from the investment bank as part of anoverhaul of the business.
Across all the investment banks tracked by Coalition, whichinclude Bank of America Merrill Lynch, Barclays, BNPParibas, Citi, Credit Suisse, DeutscheBank, Goldman Sachs, JPMorgan, Morgan Stanley and UBS, headcount dipped 3 percent.
Commodity trading was the sole bright spot in FICC, withrevenues climbing 26 percent to $1.8 billion due to higher U.S.power and gas turnover and stronger investor interest.
Revenue from banks' equity business was lower in the firstquarter, dropping 3 percent year-on-year to $11.2 billion, butinvestment banking divisions, which advise on mergers andacquisitions (M&A) and stock market listings, produced 4 percentgrowth to bring in $9.7 billion.
M&A and equity capital markets revenue rose 24 percent and 8percent, respectively, Coalition said. The financial,telecommunications and healthcare sectors were particularlystrong for deal-making, Coalition added. (Reporting by Clare Hutchison; Editing by Elaine Hardcastle)
