Deutsche Bank and Barclays have some similarities. Both are big fixed income currencies and commodity (FICC) houses. Both have witnessed a senior FICC banker rise up and take over the entire institution (although Bob Diamond was subsequently ejected and Anshu Jain is still in situ). Both have recently issued pre-emptive profit warnings.
There the blatant similarities end.
Deutsche and Barclays seem to be dealing with their travails differently. Deutsche Bank revealed today that it’s going to be cutting costs by cutting pay and keeping its long deferrals, but made no mention of redundancies in its FICC business.
On the other hand, Barclays’ current plan seems to be to cut costs by cutting headcount – the FT said yesterday that the bank wants to trim 400 senior investment bankers in addition to the 1,700 it’s cutting already. Many of the cuts seem likely to hit Barclays’ fixed income business.
So which would you prefer? Lower pay or no job? Deutsche or Barclays?
Fortunately, Deutsche Bank’s equities analysts have put the situation at Barclays into some perspective. In a note issued earlier they said that cutting 400 managing directors and directors at Barclays’ investment bank amounts to a reduction of no more than, “2% of divisional headcount and maybe 10% of headcount in those pay grades.
“This appears a sign of continued tight cost management rather than a significant re-write of the business plan for the IB,” Deutsche Bank’s analysts add.
Maybe things at Barclays aren’t so bad after all? All will be clarified on February 11th.