With one day to go until the fourth quarter, pre-bonus cost cutting is about to begin. The first to pull the trigger – ahead of time – is one of this year’s solid performers: Bank of America Merrill Lynch (BAML). We understand it’s just let go of around 10 people across its markets and investment banking teams in London.
BAML didn’t respond to a request to comment on the cuts, but insiders say they’re no big deal: this is just the usual trimming before year end. The cuts come after CFO Paul Donofrio said in May that the bank was, “making a lot of investments,” in global markets, “across equity, across macro.” However, revenues in Bank of America’s fixed income trading business fell 14% year-on-year in the second quarter. Equities revenues rose 2.7%; M&A revenues rose 49%; ECM revenues were up 7% and DCM revenues fell 7%.
The cuts in London also come after BAML announced the leadership team for its new post-Brexit banking and global markets hub based in Dublin. The new office will be run by Bruce Thompson, former CFO and former head of Bank of America’s global capital markets business. Although the current cuts are not thought to be related to Brexit, the timing is will raise eyebrows. Bank of America said in July that it plans to set up a broker dealer, or trading operation, in the Dublin capital. It’s already in the process of expanding its Irish headcount from 600 to 700 people, and is likely to increase this still further next year.
Bank of America is unlikely to be the only bank cutting headcount ahead of the 2017 bonus round. Headhunters say banks in London are already in bonus protection mode, particularly in macro businesses where revenues have failed to match expectations.