UK
Fixed income, currencies and commodities (FICC) divisions of investment banks have been the main drivers of solid first half results, bumper bonuses are expected and even crisis stricken banks are recruiting in this area. Life is good, right? Well, perhaps not for much longer.
Credit Suisse analysts have suggested in new report that as the shock of Lehman’s collapse begins to wear off, these markets will return to normal in the second half of 2009, which will inevitably mean banks’ profits take a hit.
“The very strong performance in business lines such as flow interest-rate derivatives, foreign exchange and money markets (typically highly commoditised and low-margin products) has masked the true extent of the deterioration in underlying profitability of the European investment banking franchise.”
This is not welcome news to the likes of UBS and Royal Bank of Scotland, which are looking to bolster their teams in this area. UBS has recruited 20 to its FICC team and intends to hire more, while it’s thought that RBS is being increasingly generous to people in areas likes rates, currencies and credit trading.
Similarly, with most banks posting strong fixed income trading revenues, a recent report by pay consultancy Johnson Associates is projecting a 50% increase in bonus payouts for those within the division.
But the Credit Suisse research shows that margins are on the slide. Deutsche Bank’s dropped by 45% less for fixed income trading in the second quarter than in Q1, while RBS has recorded a 58% fall in rates and 33% in FX.
It’s time to paaarty!!!!
Every so often you hear, see or read that the economy is “picking up.” and even the co-hosts of the network (you know the “talking heads”) even contradict each other which is strange in that these same people are spokespersons for the network. Lots’ of bad looks ae given to eah other. Really sad!
Even President Obama does the same thing when one out of a possible million things can happen and he finds “that one” he and his “others: will make like it is the “salvation that we all were looking for from ‘God.’ ” Whomevers God! How about a “God of Money?” I believe that this has been taken by those in Taiwan. Anyhow, those in power and the know (have the facts) should not lie and distort reality when they know otherwise. We know that there are a lot of “hopers” in America like in the World but, we have to stay with the facts or in the minimum “near facts.”