If there were going to be any hiring this year, banks' Q1 results make it very clear where it should be: DCM, rates and FX and credit trading. Predictably, there's not a massive amount going on in any of these areas, although we live in hope that things will pick up soon. Here's a quick summary of the action.
According to Credit Suisse, European debt underwriting volumes were up 48% year on year in Q109 and 130% quarter on quarter. This fed through to revenues - investment banking fees at JPMorgan rose 14% year on year 'reflecting strong debt underwriting,' and DCM revenues were up 33% quarter on quarter at Goldman (although down 26% year on year).
But is DCM activity leading to hiring? Unfortunately not. Although Calyon has retrieved a few people, including Alexandra MacMahon - a former MD at Morgan Stanley, Q1 hiring has been limited.
"We haven't seen any indications of DCM hiring this year," says Lee Thacker of Silvermine Partners. "Most teams will remain fairly static."
The fixed income-focused head of another search firm says there's some upgrading fro the second tier and that Nomura, JPMorgan and Citigroup are considered 'thin on the ground' in DCM, but big hiring is out of the question. "It's very strategic, very opportunistic. Houses are interested in upgrading with senior people who can actually make a difference."
Rates and FX
FX trading boomed last year and appears to be steaming ahead in 2009. Bank of America's Q1 revenues from rates and currencies trading rose 395% year on year in Q1 and volatility is still high by historical standards.
FX recruiters can be described as vaguely optimistic.
"There's been a move towards covering real money clients," says Peter Harwood at Principal Search. "At least half a dozen banks are looking at expanding in this area."
Much of the FX hiring so far this year has been at Canadian and Australian houses. For example, CIBC hired Eric Price and Mark Sweeting in February, and RBC hired Natasha Brookwaters. TD Securities, State Street and Macquarie are also said to have been adding headcount.
"Canadian and Australian institutions which have fared relatively well in the downturn see this as the best window of opportunity they've had in fifteen years to upgrade at comparatively low cost,"' says one FX headhunter. "They will continue hiring this year, without a doubt."
In rates, activity is a little more subdued. Citigroup hired a team of seven rates salespeople from the remains of Lehman last October, but recruiters say this is the only notable piece of hiring in the area for months.
"If they can get it past senior management, there's definitely a desire to add to flow rates teams in Europe. Most banks have kept rates teams pretty lean," says one rates search consultant. However, he thinks it unlikely that much will happen this year.
Fixed income flow trading
Wide spreads made fixed income flow trading the darling of the first quarter, with European volumes up 30% year on year according to Credit Suisse.
David Durham of search firm Durham Consultants says major US banks are looking to build their flow trading capability. However, according to another recruiter the big demand is really from brokerage houses seeking to capitalize on the sudden availability of cheap salespeople and sales traders. Evolution, for example, intends to expand its fixed income sales team from 25 to 40, and announced two hires from SocGen this week. .
Whether these brokerage jobs will last when liquidity returns is open to question, however. "The general view is that this business will be around for one or two years," says the recruiter.