In theory, it's hiring season in the wild world of investment banks. In reality, some people are indeed moving, and they're moving to European banks. It's so fortunate, therefore, that Deutsche Bank's banking analysts have recently issued a whole compendium of strategy-related questions to ask at European banking interviews.
If you're interviewing at the Swiss banks, at the French banks or at Barclays and HSBC this year and you want to look clever and cognizant of the big issues facing each firm, you might want to pose the questions we've picked out from Deutsche's analysts below (some of these play across banks). Then again, you could always ask what a typical day is like in that division.
Questions to ask when you're interviewing at Barclays:
2016 revenue was ahead of expectations for the group. The investment bank has now enjoyed 4 consecutive solid quarters of performance. How sustainable do you think this is?
How does Barclays plan to retain passporting rights within Europe after Brexit? How much of the Barclays investment bank business is actually business with European customers?
Barclays had reduced the size of the investment bank in recent years. What is the intended mix of the investment bank and retail bank going forward? Revenue outlook suggests more pressures in the UK business due to the lower rate environment (lower NIMs). Is it fair to assume that the growth in revenues from here comes more from Barclays International? [Barclays International includes the investment bank]
Guidance for the ongoing core bank is to have £13bn of costs...How much flexibility do you have for the cost base of the investment bank? In the non-IB, salaries outsourcing and temporary staff costs are remained stubbornly high – is there a potential to reduce these? Are you expecting to increase investment in areas of the investment bank?
Questions to ask when you're interviewing at BNP Paribas:
You target an ROE of 10% again, yet on a higher capital base than before (12% vs. 10%). Do you think that longer term the industry and BNPP will be able to generate more than 10% ROE? What would it take for you to achieve this?
What’s your view re regulatory risk, especially Basel 4 but also IFRS 9, TRIM, FRTB, etc.?
Questions to ask when you're interviewing at Credit Suisse:
How will the investment bank be able to generate a respectable return? (Since 2014, fixed income sales and trading market share has declined from 6.5% to 3.5% while equities sales and trading has declined from c9.0% to 7.0%. At the same time, there are issues with APAC IB where management has indicated a challenging start to 2017.)
What is the potential impact of Brexit on Credit Suisse's operating model & related costs? What are your expectations of both temporary and permanent regulatory spend over the coming years?
Questions to ask when you're interviewing at HSBC:
HSBC recently revised its target from $4.5-5bn of annualised savings to US$6bn, with a revised CTA of US$6bn vs. US$4- 4.5bn. Please discuss what areas these cost savings are being made? Are there are any revenues attached to these cost savings? How do you allocate costs to the individual businesses and regions within HSBC? In the long-run what do you think your cost/income ratio will be?
Currently HSBC has c.US$30bn of capital making ~1% RoE in the USA Bank. Even with some upstreaming of capital these return levels remain extremely low vs. peers. What is the plan to improve these returns and what is the long-term strategy for the US business?
Given components of the global banking and markets business are in Europe, Asia and US subsidiaries, how is this business managed globally, and how are RWAs / capital / revenues / costs allocated across these geographies?
Questions to ask when you're interviewing at SocGen:
French political risk – what’s your view and what’s the risk for SocGen?
What to ask when you're interviewing at UBS:
How is UBS dealing with its potential litigation risks? (UBS faces the risk of fine from US residential mortgage backed securities as well as French cross-border tax investigation. It recently lost its appeal at the European Court of Human Rights and expects other countries to file similar requests.)