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Morning Coffee: J.P. Morgan’s investment banking shrinkage, Citigroup returns to sexy banking

JP Morgan

Could J.P. Morgan's investment bank be about to get smaller?

J.P. Morgan tops the revenue rankings in every aspect of investment banking – aside from equities, but it’s trying to there – so when it says that it’s pondering downsizing in capital intensive business areas, shudders should run down every trader’s spine.

UBS, Morgan Stanley and Credit Suisse have already pulled back from certain fixed income divisions and FICC powerhouse Deutsche Bank is in the midst of a review to be unveiled in the second quarter. J.P. Morgan’s corporate and investment bank chief executive, Daniel Pinto, could unveil a strategy review that’s likely to result in the shrinkage of certain markets businesses as soon as 23 February, he told Bloomberg.

Obvious targets include interest rates trading, prime brokerage and possibly the bank’s Delta One business. Important note – this doesn’t necessarily involve “significant” job cuts, or exiting these divisions entirely, he says.

“Our scale gives us leading positions across these businesses even as others pull back,” he said. “But there are always ways to streamline things and be more efficient.”

Separately, despite a reduction in risk taking activities since being battered during the financial crisis, Citigroup still has an appetite for the sexier areas of investment banking. In an attempt to ensure the bank hits performance targets set in 2013, Citigroup has been expanding into commodities while its rivals retreat, as well as building in derivatives Share on twitter and maintaining a government bond prop trading desk. This is definitely not boring banking.

Meanwhile:

“Avoid the quants from third world countries. If they ever find out what you get paid, they will kill you.” (Business Insider)

Boutique politics: Perella Weinberg fires its head of restructuring for trying to leave and set up his own firm with three other colleagues. They were also fired (Financial Times)

The number of financial jobs in New York will never reach the peak of 15 years’ ago despite the investment banking boom, says Manhattan Institute. Finance jobs account for 4% of the jobs in the city, but 19% of wages. (Crains)

Solid fixed income performance has bolstered revenues at Credit Agricole’s investment bank (Bloomberg)

Swiss prosecutors have raided the offices of HSBC in Geneva. Expect more of these investigations at banks in Switzerland in the near future, says PwC. (Financial Times)

Jamie Dimon says fire bad employees: “They will destroy your company” (The Columbus Dispatch)

Tips on how to appear more intelligent than other people, even if you’re not (Telegraph)

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