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There are some worrying signs.

Macquarie's London equities business keeps hiring. But can it last?

Last year was a biggish year for Macquarie's London equities business. The Australian bank went all-out to build a team under Daniel Kaye, the head of cash execution and sales whom it hired from Credit Suisse in 2017. After a year of fervent recruitment, in which Macquarie made multiple London hires (many of then from Credit Suisse) and Kaye allegedly splashed cash to get people on board, equities recruitment has slowed. But it hasn't stopped.

So far this year, Macquarie's London business has added at least three new equities staff - Simon Fickling joined from Barclays in March to work in specialist sales and David Hewitt joined as head of oil and gas research in February, along with senior analyst James Carmichael.

Macquarie's intention of building a European equities trading business has clearly not succombed to the ravages of MiFID II. This is not to say, however, that the horizon is entirely cloud-free.

Two weeks ago, Macquarie reported its full year results for 2018. Macquarie's equities revenues fell 33% on 2017 thanks to "challenging conditions", especially in Asia. And the bank said conditions are expected to remain challenging in 2019.

Macquarie isn't the only bank to have hit a wall in terms of equities revenues. JPMorgan, Goldman Sachs, Morgan Stanley, Bank of America, Citi, Barclays, UBS and Deutsche all experienced double digit percentage declines year-on-year in the first quarter. Only Kaye's old house - Credit Suisse - escaped. And this seems largely to have been thanks to the efforts of some exceptional equity derivatives traders. 

With equities revenues falling, Macquarie's London build could possibly be construed as an example of poor-timing.

Macquarie's London equities traders could also be forgiven for looking askance at events in Canada. Last month, The Global and Mail reported that Macquarie was cutting its Canadian equities business after a, "prolonged slump in resource-related deals," leading to up to 80 job losses. Although a spokesman for the bank said Macquarie isn't closing its Canadian equities business altogether, the Australian bank is clearly prepared to be ruthless when necessary.

For the moment, there's no indication that Macquarie's Canadian cost-cutting mettle is coming to London. And given that the bank is still hiring in equities, there may be no reason to be afraid. The good news is that Macquarie didn't acquire Liberum after all last year, and therefore didn't boost its London equities headcount even higher. The other good news is that Macquarie is already saving $10m a year on MifID II implementation costs, which more than halved in 2018 compared to a year earlier.

The bad news is that Macquarie is now spending $7.6m a year on Brexit. The European equities business will need to show results soon.

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AUTHORSarah Butcher Global Editor

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