There is no shortage of banks looking to pull back from fixed income sales and trading. Credit Suisse, RBS, and Barclays have all made explicit statements about their intention to make hundreds (if not thousands) of redundancies. Finding a job as a laid off fixed income professional in 2014 is not going to be easy. And yet, some banks are still growing their fixed income businesses. We've chosen five of the biggest below. Not all are as appealing as they seem.
FICC revenues in 2013: €2.2bn ($3.02bn)
Revenue trend: Down. In 2013, SocGen's FICC revenues fell 21%. In the fourth quarter of 2013, SocGen's FICC revenues fell by 39% year-on-year. In the first quarter of 2014, its revenues fell by 25% year-on-year. Things aren't looking great.
Revenue aims: Overall, SocGen wants to grow its markets business (equities and fixed income), but it doesn't it to grow that much. A 1% increase is expected across markets and securities services between now and 2016. This compares to a predicted 10% increase in financing and advisory revenues at the French bank.
Hiring plans: The good news is that SocGen seems to be hiring. In February 2014, it said that it wanted to hire in credit in Europe and for rates and currencies in Asia and the U.S. This was reiterated in yesterday's investor presentation, when SocGen said that it wants to "invest to selectively develop areas of expertise in fixed income." Specifically, it wants to: 'leverage internal flows to monetise FX and rates,' 'develop a credit franchise on the back of primary origination' and (strangely given its existing exposure to Russia), 'grow the franchise in CEEMEA.'
Upside of joining SocGen's FICC business: It's actually hiring. In January 2014, JPMorgan's analysts said SocGen had one of the best-looking investment banks in Europe. Unlike rivals, it cut costs early. Nor does it have a mountain of toxic assets. Frédéric Oudéa, SocGen CEO, told the Financial Times that the bank is able to hire in fixed income sales and trading because it doesn't have a lot of legacy issues or a bad bank - it's growing from a low base.
Downside of joining SocGen's FICC business: SocGen's been saying that it wants to hire in fixed income sales and trading since 2010, but it hasn't hired many people or made much headway in terms of revenues. In these days of 'flow monsters' dominating fixed income sales and trading, the French bank is a small presence, particularly outside Europe. In yesterday's presentation, SocGen highlighted its 9% share of EMEA flow rates trading and 4% share of EMEA flow credit trading, but it's weak elsewhere. The bank is more focused on its market-leading equity derivatives business, which it's also hiring for now.
Separately, like many other banks, SocGen seems to have very strict risk controls following its bad experience with Jerome Kerviel. The chart below illustrates the extent to which even small losses are no longer tolerated.
Daily loss occurrences at SocGen 2007-2013
Who do you need to know there? SocGen's global FICC business is run by a woman: Danielle Sindzingre. Oliver Gazzolo is global co-head of flow credit trading. Albert Loo and Pascale Moreau are global heads of FICC sales, based in Paris. Fran Mulvey is head of credit trading in the US. Mark Landis is head of FICC sales for the Americas. Gian-Luca Fetta is global head of FX.
FICC revenues in 2013: ¥398bn (US $4bn)
Revenue trend: Up. As we noted earlier this month, Nomura's fixed income revenues seem to be moving in a manner diametrically to other banks'. While most banks' fixed income sales and trading revenues fell dramatically in 2013, Nomura's rose by 38%. In its annual report, the bank said its American fixed income sales and trading revenues rose dramatically and attributed growth elsewhere to increased client flows.
Revenue aims: Nomura hasn't broke out any hard targets for its fixed income revenues.
Hiring plans: In its 2013 annual report, Nomura said it would continue 'enhancing' its fixed income services business, covering institutional investors globally and retail clients in Japan. In particular, it said it wanted to enhance its electronic trading and clearing efforts. In May 2013, Nomura said it intended to hire fixed income sales staff globally. And in London this year, the Japanese bank has been out hiring senior fixed income sales professionals from the likes of RBS and RBC Capital Markets.
Upside of joining Nomura's FICC business: With its already large and expanding fixed income revenues, Nomura looks like a good bet. The Japanese bank has clearly been seizing market share. Revenues in the business were at a three year high in 2014. Nomura's whole markets division is run by Steve Ashley, a former RBS rates trader who is reputedly a genuinely nice person.
Downside of joining Nomura's FICC business: Even though Nomura is increasing it share of global fixed income sales and trading, it's still small compared to market leaders like Goldman Sachs and JPMorgan. In January 2014, Jonathan Lewis, deputy chief financial officer at Nomura, put its share of fixed income revenues at just 5%. Nomura's markets business sits on one combined equities and fixed income trading floor. Capital is allocated centrally across fixed income and there's a focus on cross-selling. This is unusual, but the bank insists that it works...
Who do you need to know there? Clearly, it will help if you're friends with Steve Ashley. Failing that, you could try Garry Cottle, head of global markets EMEA, Rob Maher, global head of electronic markets, Jai Rajpal, global head of FX, or Charles Spero, head of global markets in the Americas.
FICC revenues in 2013: A$1.62bn (US$1.5bn)
Revenue trend: Much like Nomura, Macquarie's fixed income sales and trading revenues have been rising. When Macquarie reported its full year results for the year ending March 2014, it said revenues in its FICC business were up an impressive 29% year-on-year. However, it's worth bearing in mind that when Macquarie talks about FICC, what it really means is mostly commodities sales and trading. This accounted for 67% of its FICC operating income in 2013 according to the bank's results presentation. By comparison, credit and FX accounted for 22% of the total and futures trading accounted for 11%. Accordingly, much of the top line increase in Macquarie's FICC revenues came from commodities, where its business grew by 58% year-on-year.
Revenue aims: Macquarie hasn't broken out any revenue aims.
Hiring plans: Macquarie hasn't mentioned any hiring plans. However, it recruited Alan Hawkins, a former JPMorgan power and gas trader in London in January 2014 and clearly wants to grow its commodities unit after reportedly competing against Mercuria for JPMorgan's commodities business before pulling out.
Upside of joining Macquarie's FICC business: Macquarie looks like a good place to go if you're a commodities professional. The Australian bank stands well placed to pick up business as rivals like Barclays, Deutsche Bank and Morgan Stanley pull back.
Downside of joining Macquarie's FICC business: Beyond commodities and away from Asia Pacific, Macquarie's fixed income business is tiny. In recent years, the bank has also gained a reputation for paying badly.
Who do you need to know there? U.S.-based Walter Pye is head of FICC for the Americas and co-head of metals and agriculture sales and trading globally. London-based Sebastian Barrack is the other co-head.
FICC revenues in 2013: CA$1.834bn (US$1.68bn)
Revenue trend: Up. Unlike most other banks, RBC managed to achieve an 8% increase in FICC revenues year-on-year in the first quarter.
Revenue aims: None to speak of.
Hiring plans: RBC insiders inform us that a strategic build of the fixed income business is underway, with a focus on sales hires. The Canadian bank just hired Tom Millar from Barclays as head of UK and Ireland liability driven investors.
Upside of joining RBC's FICC business: It's hiring. And it's hiring from Barclays.
Downside of joining RBC's FICC business: It's small.
Who do you need to know there? In London, try Sian Hurrell, head of rates sales, Mike Foster, head of central bank sales, or Alistair Hollingdale, head of European rates trading.
FICC revenues in 2013: €6.9bn ($6.33bn)
Revenue trend: Seriously down. FICC revenues fell by 25% in 2013 and by a further 16% (all things being equal) in the first quarter of 2014.
Revenue aims: Don't mention revenues, Deutsche is all about increasing its return on equity. The bank 'no longer wants to be all things to all people' and is happy for FICC revenues to decline in areas where it's no longer able to earn a good return (eg. commodities).
Hiring plans: Despite the sorry state of its business, Deutsche has let it be known that's hiring and upgrading its fixed income business, especially in the U.S. It just added seven senior traders and credit analysts to its fixed income business in New York.
Upside of joining Deutsche's FICC business: Deutsche is one of the leaders in FICC globally. It has a well-established franchise in Europe and is looking to grow in America.
Downside of joining Deutsche's FICC business: If revenues don't pick up soon, Deutsche's expansionary plans may go out the window. The German bank has been slowly losing market share and could face serious headwinds in the U.S. as new capital rules for foreign subsidiaries come into effect. Deutsche bank pays its MDs under a system of very long deferred bonuses. Worst of all, if Anshu Jain leaves (a real possibility), Deutsche could do a Barclays and pull back from FICC dramatically.
Who do you need to know there? Rich Herman and Zar Amrolia are Deutche's co-heads of fixed income currencies and commodities. Herman is moving to New York, having only been promoted into the role in February 2014. He looks like the person to know if you want to get in on Deutsche's U.S. push.