Equity derivatives professionals had a wobbly time last month. Financial News points out that rising volatility and correlation exacted a toll on equity derivatives desks at BNP Paribas, Deutsche Bank and Natixis. Each made losses as high as €300m ($382m), while Caisse d'Epargne lost €600m. Future losses are expected at the likes of Credit Agricole and Credit Suisse.
It doesn't bode particularly well for equity derivatives jobs, equity derivatives bonuses, or for bonuses at French banks like SocGen and BNP Paribas, which derive a high proportion of investment banking revenues from their equity derivatives businesses.
Cuts have been made already: Natixis and Calyon have both said they will close their exotic equity derivatives operations and headhunters say equity derivatives teams are smaller than they used to be.
"There have already been some cuts in equity derivatives, but they're not nearly as visible as in fixed income," says Jason Kennedy, CEO London at Kennedy Associates. "There will definitely be more people let go on the structuring side in future."
Simon Maughan, a banking analyst at MF Global Securities, says French banks look overstaffed across the board. "Both BNP Paribas and SocGen are still operating as if markets will return fairly quickly, and they won't," he says.