The perspective at the end of Q1: there will be some hiring in fixed income; there will be some firing in equities

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As we near the end of Q1, people are feeling a little more confident about predicting how 2012 will play out. A consensus is emerging: 2012 could be a good year for fixed income jobs and hiring, but cash equities still looks poor and there may be firing.

“In aggregate, the start to this year has been better than anticipated,” says one senior banking analyst in London, “but it’s been very lopsided. - The start to this year has been fixed income driven, whereas cash equities has been light with volumes lower than anticipated and much of the activity has been in programme trading.”

The fixed income renaissance was indicated this week by Bob Diamond, who said Q1 2012 had been better than Q1 and Q4 2011. BarCap has a market share of around 8.2% in fixed income, but only 2.8% in cash equities, so Bob's pronouncements about FICC are seen as more prescient.

Similarly, Jefferies’ results for the three months ending February 2012, showed a dramatic improvement in fixed income sales and trading –  revenues in its business were up 6% on Q1 2011 and 142% on the three months ending November 2011.

“I can see some hiring later in the year in fixed income,” says the analyst. Headhunters in fixed income say it’s not really happening yet, however, and that banks’ refusal to pay guarantees is emerging as a big problem.

In equities, meanwhile, the first quarter has not been great and - if anything, further redundancies look likely.

“People were put on notice at RBS today,” said one equity derivatives headhunter (yesterday). “And there have been a bunch of people let go from BAML in the past few weeks.

“There was always general market trimming on the cards for the first quarter if things didn’t pick up substantially,” he adds. “That’s now going ahead. The general view is bad, but it could have been a lot worse. That’s how people are looking at things nowadays.”

HSBC’s global head of equities said on Tuesday that most banks are going through a period of strategic soul searching in relation to their equities businesses, and that the peak levels of 2005-2008 will never ever return.

“The question being asked at every major firm is: 'Do I need 2,000-2,500 people in equities in the current environment?,’” he said, without divulging how many people HSBC’s own (underweight) equities business employs.