You’re looking for a new finance job and you can’t find one. This might have something to do with the poor state of your banking CV. Or it might have to do with external factors entirely beyond your control.
If you’ve purged your CV of stupid mistakes and are still failing to gain any traction, here’s what you can blame for your lack of headway.
1. The weakening outlook for FICC revenues
Fixed income currencies and commodities (FICC) businesses are the ‘engine rooms’ for investment banks. When FICC is roaring, so are banks’ revenues.
For a brief moment earlier this year, it looked like FICC was back in action. In May, Jamie Dimon declared the secular decline in FICC over, macro traders had a great first quarter, everything was fine.
More recently, however, there have been FICC wobbles. Credit Suisse is back to expunging rates traders and J.P. Morgan’s banking analysts are predicting a 25% quarter-on-quarter reduction in FICC revenues in the three months to June when banks report their second quarter results (a 1% reduction year-on-year).
This is not growth. It will not inspire hiring.
2. The weakening outlook for equities revenues
While FICC revenues are going to be weak, equities revenues are weakening quarter on quarter, but increasing year-on-year.
Although an investor survey by Barclays (see below) suggests equities will be the asset class to benefit the most over the next three months, this isn’t expected to feed through into banks’ equities revenues. J.P. Morgan’s banking analysts are predicting an 8% decline in equities revenues in the second quarter as a result of low volumes. Year-on-year, however, they think equities revenues will be up 9%, suggesting this excuse might not hold water…
Source: Barclays Macro Survey
3. The weakening outlook for DCM revenues
In Europe at least, this is not a good year to work in debt capital markets (DCM). At June 17, European DCM deals were down 27% year-on-year according to Dealogic. This was the lowest year to date level of activity since 2011. When DCM deals do happen in Europe, they’re spread between an increasingly large number of bookrunners, making it difficult for banks to make money from them.
4. The bluster over M&A
M&A bankers are having a wonderful time, in theory. Hernán Cristerna, co-head of global M&A at JPMorgan Chase, told the Sunday Times we’re in a ‘golden age’ for the industry. Indeed, at the end of May, M&A was at a record level globally.
However, the M&A boom hasn’t been equally distributed globally. In the first quarter, M&A rose 30% in the US and fell 4% in Europe, for example. And while European M&A was up 20% year-to-date by June, it was up 47% in the U.S. and 60% in Asia. Similarly big increases in Europe are likely to be contingent on resolution of the Greek crisis.
5. The new bosses at Deutsche, Credit Suisse, Standard Chartered and Barclays
Plenty of banks have new bosses who have either arrived or are in the pipeline. And new bosses are not inclined to hire until they’ve surveyed their terrain. Barclays doesn’t have a new CEO, but it does have a new chairman. And John McFarlane is expected to go through Barclays’ investment bank with a fine toothed comb.
6. The coming review of the trading book
As we noted last week, banks are preparing for the Fundamental Review of the Trading Book. The FRTB will require banks to set an increasing amount of capital against their credit trading activities in particular. This will not be good for credit traders (see 1).
7. Fear of rising interest rates
Will there be another taper tantrum? Maybe not. Deutsche Banks’ analysts issued a note today saying that ‘acute risk’ of a taper tantrum is minimal if rates are normalized gradually. However, they note that outlflows from bond funds and Greece are ‘sources of concern’ in credit markets over the near term.
8. Fear in general
We live in interesting times. Barclays’ macro investor survey suggests investors aren’t overly worried about Greece. Nor are they over worried about rates. But they are worried about other things – most notably weakness in China and emerging markets. Blame this for your failure to find your desired role.
9. Your high salary expectations
Finally, you might find it easier to find a new role if you weren’t such a high fixed cost. Now that salaries have been hiked again, banks will think twice before adding headcount unless it’s unavoidable.