Early 2021 hasn't been bad for banking revenues, even if those revenues haven't quite fed through to banking jobs. This week's report from research firm Coalition highlighted "exponential growth" in equity derivatives trading on the back of strong retail client activity, plus extremely strong growth in equity capital markets (ECM). By comparison, Coalition said first quarter revenues declined in areas like G10 FX, rates and emerging markets macro.
While banks are certainly swapping staff in equity derivatives, this week's fixed income trading cuts at BNP Paribas show that they're also trimming costs where necessary. In its own retrospective look at first quarter revenues, banking intelligence firm Tricumen says some banks have more need to trim costs than others.
Tricumen is best known for its spider charts depicting cost ratios and operating revenues per employee, by bank, and by business. In these charts, a position near the centre is bad and suggests underperformance relative to peers; a position on the outside is good and suggests the opposite.
On this basis, the charts from Tricumen below suggest that some of the least productive and therefore potentially most precarious employees in the first quarter were in SocGen's investment banking (ECM, DCM, M&A) and SocGen's fixed income sales and trading divisions, in equities sales and trading at RBC and UBS, in banking at HSBC, and in fixed income sales and trading at BNP Paribas (which explains the cuts).
By comparison, Tricumen's analysis suggests that front office jobs at Goldman Sachs look comparatively safe all round, as do those at JPMorgan and Morgan Stanley. - If anything, high productivity levels suggest these U.S. banks can afford to add rather than cut staff as this year progresses.
Operating revenue/full time employees, first quarter 2021, investment banking divisions
Operating revenue/full time employees, first quarter 2021, fixed income currencies and commodities trading
Operating revenue/full time employees, first quarter 2021, equities trading
Photo by Pop & Zebra on Unsplash
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