While all eyes were on the horrible implications of Deutsche Bank’s $14bn fine for its strategy/survival, Deutsche’s banking analysts slipped out a short report on the state of European banking on Friday morning. If you happened to miss it (as did we), we’d like to draw your attention to some interesting charts contained within which could have implications for your job security in the final months of 2016.
Needless to say, Deutsche’s analysts didn’t direct their analytical observations towards their own futures, but this is what they had to say about everyone else’s.
1. Now is the time to work in DCM! Now is not the time to work in equities
We suggested recently that equities businesses look exposed right now. Deutsche’s analysts seem to agree: they think equity derivatives revenues fell nearly 40% year-on-year in the third quarter and that cash equities revenues are down by between 10% and 30% depending upon your location.
By comparison, it’s a great time to be working in debt capital markets (DCM). As government bond-buying programmes encourage corporate debt issuance, DCM revenues are booming. Deutsche predicts that investment grade DCM revenues will rise nearly 50% year-on-year in the third quarter.
2. Now is the time to work for a bank with a big bias towards fixed income trading
With debt markets doing so well and equity markets doing so badly, you want to spend the final quarter of this year working for a bank that’s maximally exposed to fixed income and minimally exposed to equities.
Clearly, this would include Deutsche itself, but Deutsche’s analysts omit their own employer from the charts below. Instead, they suggest that somewhere like BNP Paribas is a good bet (by comparison, Morgan Stanley looks best avoided).
3. Here’s how to replicate the experience of working for a U.S. bank at a European house
Lastly, Deutsche’s analysts have undertaken the interesting and unusual intellectual exercise of pairing European and U.S. banks together on the basis of their similarities. If you want a U.S, banking-style experience while working for a European bank, you might therefore want to consult the chart below.