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Second-Tier Banks Risk FICC Firings

You're fired

UBS, which walked away from fixed income, currency and commodities (FICC) trading last year, took plenty of heat from pundits following its decision. Now it appears UBS may have resigned before being fired.

Analysts with the Deutsche Bank believe new regulations will strip roughly $17 billion in global sales and trading revenue from investment banks by 2016. That’s 9% of 2012 global sales and trading revenue, according to Reuters.

The real losers will be second-tier firms, along with their employees. Deutsche Bank analysts note that any bank with less than a 6% market share is at risk of being forced to exit the bond business altogether.

That would leave J.P. Morgan, Citigroup, Barclays, Bank of America, Goldman Sachs and Deutsche Bank. Big names like Morgan Stanley, Royal Bank of Scotland, HSBC and dozens of smaller players would need to exit FICC if the analysis remains true.

Morgan Stanley, a bank with a smaller FICC presence than some rivals, saw an eye-opening 42% drop in FICC trading in the first quarter. Goldman and J.P. Morgan saw single-digit drops in revenue.

Could Morgan Stanley be the next UBS? In an interview with Reuters, Chief Financial Officer Ruth Porat claimed not.

Facelift Needed (WSJ)

Struggling boutique investment bank Gleacher, which has watched staffers walk away in droves in recent months, is “broken” but not beyond repair, says one activist hedge fund that hopes to remodel the New York firm as an asset manager.

Lehman’s Leverage (eFinancialCareers)

Did last week’s Barclays reshuffle, which saw ex-Lehman rainmaker Skip McGee promoted to a new position as chief executive of Barclays in the Americas, serve partly to placate U.S. bankers at the businesses Barclays bought from Lehman in 2008? Yup.

‘Wall Street is a Scam’ (Business Insider)

Life has its ups and downs. Here is a list of all the downs one hedge fund manager experienced as an adult. There are quite a few.

Spicy Proxy Season Looming (WSJ)

Shareholders appear poised to confront Credit Suisse about its compensation plans during this week’s annual meeting. Other Swiss banks may be targets as well.

Carrying the Load (Bloomberg)

By 2023, the top 1% of U.S. earners will pay 67% of tax increases proposed under President Obama’s new budget plan.

No Mom and Pop Rentals (Bloomberg)

Here’s a dirty little secret: Hedge funds and private equity firms are doing much of the real estate purchasing in the U.S., taking advantage of lower home prices and the hot rental market.

Large Legal Bill (Financial Times)

Deutsche Bank has put aside more than $3 billion in litigation reserves to handle a host of regulatory probes. The firm will need to set aside another $8 billion if famed Norwegian investor Alexander Vik wins a lawsuit that began yesterday in London.

Buzz Around the Office

15 Seconds of Fame (NY Post)

If you think you’ve had a bad first day at work, you’ll feel better after watching this video. A North Dakota anchorman mistakenly curses twice 15 seconds into his first on-air appearance. Oh, and the video has gone viral.

List of the Day: Unnecessary Reactions

You likely think your boss wants you to do these things. They don’t.

  1. Provide constant updates.
  2. Painstakingly detail why something went wrong.
  3. Feign approval of their ideas.

(Source: The Daily Muse)

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