Today was the turn of Citigroup to report its results for the second quarter. If you're an investment banker at Citi in London, they look pretty good.
Unusually among U.S. banks, Citi gives an idea of the performance of its investment bank by region. At Citi, investment banking is included in the Institutional Clients Group (ICG). ICG includes sales and trading, M&A and capital markets, private banking, treasury and corporate lending. 63% of its revenues come from sales and trading and capital markets activities.
In the three months to June, Citi's ICG business in Europe, the Middle East and Africa performed abnormally well. As the charts below show, revenues in the business rose by 7% year-on-year and profits rose by 21%. Nowhere else came close (particularly not Asia).
Needless to say, EMEA isn't just London: Citi being Citi, it has 52 offices across the region. In sales and trading and M&A and capital markets, however, London is key. In 2014 (the last year for which figures are available) Citi had just 263 employees in its Frankfurt global markets, compared to over 9,000 people in total in the UK.
Higher Brexit-related trading volumes helped Citi in the second quarter. In today's investor call, CFO John Gerspach said the bank benefited from a, "particularly strong performance in the days following the UK referendum."
Will the good times last? Gerspach declined to answer a question on trading conditions as the vote recedes. Citi's London bankers need to hope they do though: margins in the EMEA ICG business are considerably lower than those elsewhere in the world. If Citi wants to cut costs, London looks like a good place to start.