Late Lunchtime Links: Deutsche Bank thinks things could get much worse over the next five years

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Going downhill fast

Fast track

In the ideal world, things will get a lot better soon. Not long ago, recruiters were predicting an upsurge in hiring come the second quarter as banks settled into their stride, people looked for new jobs after bonuses and the outlook improved. In fact, the number of new candidates coming onto the market is at a five year low. Banks aren't creating new roles and people aren't moving around in existing roles. Stasis.

In fact, the first quarter hasn’t been that bad for the likes of Goldman Sachs, Citi and JPMorgan – especially in fixed income.

And yet, just when things are looking a little better, Deutsche Bank has produced a report pointing out that things could get a lot worse.

Specifically, Deutsche points out that:

“…the market is currently implying 4.3 or 7.4 credit events out of the 15 sovereigns in the index assuming either a 40% or 20% future haircut… If these implied defaults come vaguely close to being realised then the next 5 years of corporate/financial defaults could easily be worse than the last 5 relatively calm years.“

Notably, Deutsche says the last five years have actually been abnormally quiet in terms of financial services defaults and that this was mostly because:

“The free market level of defaults would have likely been catastrophic for credit investors and herein lies the reason for the relatively low levels of defaults. It became potentially so bad in the 2007-2011 period that the authorities had little choice but to prevent the default rate of financials from escalating outside of historical norms."

It concludes:

“…Much may eventually depend on how much money printing can be tolerated as we are very close to being ‘maxed out’ fiscally.” 

It may be a while before the banking job market mounts an especially hearty recover.


SocGen stock has been falling quite heavily again today. (Yahoo)  

Who knows - by 2013 and 2014 you might want to work for a French bank. (Bloomberg)

Banks have hired lawyers to look into suing the EU if Brussels imposes new restrictions on bonuses that might wreck their businesses. (CityAm)

City of London still trying to become a Yuan trading centre. (WSJ)

Prime brokers are demanding higher fees and increasing margin requirements. This cannot be good if you work for a small hedge fund. (Financial Times) 

A European equity-focused event driven fund manager is hiring. (FinAlternatives) 

UBS’s US head of investment banking has left. He just wants to be more entrepreneurial and to start his own firm. (WSJ)

If you delay your MBA, you will lose money. (BusinessWeek) 

Most Britons think they need an extra £411 a month for a comfortable life. (InsuranceDaily)

Kweku Adoboli wants a laptop. (Financial Times)