Bank by bank, this is what's happening this summer - and what will ensue as summer draws to an end.
From hiring to firing: This time last year, ABN Amro was busy letting everyone know that it was building out its corporate and investment bank. 12 months on, it seems to have had a change of heart: the Dutch bank said today that it wants to cut 250 jobs from its corporate and investment bank and to shrink back to its domestic market as it seeks to increase its return on equity. Let this be a warning to anyone would join a European bank in the midst of an expansionary outburst.
Big hiring, small firing: Barclays was the big hirer of 2017 and Barclays is also turning out to be the big hirer of 2018. In the 18 months to June 2018, the UK bank says it recruited over 30 managing directors to its global markets division, including - most recently - Dean Galligan - an MD from Goldman Sachs. Barclays has been busy building its equities sales and trading division under new global head Stephen Dainton, but there's a push into corporate finance too with an "aggressive" push to hire bankers to cover continental Europe. Oh, and there's also been some firing of late - both in credit and in equities.
What next? Barclays is reallocating capital to high yielding parts of its investment bank and while there's not much talk of overt hiring, more of the same seems likely. During the bank's second quarter results call, CEO Jes Staley said Barclays is now, "In a position to contemplate new investments and opportunities to grow the top line and bottom line."
A seeming need to hire some more M&A bankers: Bank of America didn't exactly say so, but a cursory look at its second quarter results suggests it could probably do with hiring some new M&A bankers to cover the American market. Bloomberg said in June that BofA had lost 14 managing directors from its advisory division, of whom 10 were in the U.S. For some reason, BofA's M&A revenues were down 36% year-on-year in the first half, while rivals like J.P. Morgan and Morgan Stanley achieved 20% increases.
Bank of America CEO Brian Moynihan didn't say anything specific about M&A hiring in the bank's second quarter investor call. Instead, Moynihan said: "We know we can do a better job there and the team is working on it."
Supposed to be hiring, could benefit from firing: BNP is going for growth in its corporate and investment bank. As we noted last week, the French bank aspires to a 4.5% compound average rate of revenue growth there each year thanks to things like cross-selling, deeper penetration of global markets products with corporate clients and deeper client relationships in general. Instead, revenues are shrinking.
Hiring is happening at BNP. The French bank just recruited James Moi, a structured credit trader from Credit Suisse, for example. It's also been hiring for its equity derivatives sales team. However, BNP also aims to make €1.1bn of cost savings across the bank in 2018. With the Corporate and Investment bank the main target until now (42% of existing cuts have hit the CIB), with the global markets division under-performing and with talk of pursuing "efficiencies", some redundancies seem inevitable.
Adding 'talent', eliminating inefficiency: As per its most recent investor day, Citi is supposed to be growing revenues in its institutional clients group (investment bank) by investing in "talent" to work on deals in the technology, financial institutions and energy sectors. In July, it hired two UBS M&A bankers for France, based out of Paris.
The investor day presentation also spoke of "leveraging the global network" in fixed income and "capitalizing on [existing] investments in talent and technology" in the equities sales and trading division. In equities, things appear to be going to plan: Citi's equities sales and trading revenues were up 29% in the first half of this year - second only to Barclays' increase of 30%. Things didn't work out so well in fixed income, though. Here, Citi's revenues fell 7% in the first half, putting the bank on a par with BofA. Only Deutsche was worse (fixed income revenues down 19%).
Like most banks, Citi is cutting costs. During the investor call accompanying the second quarter results, CEO Mike Corbat noted Citi's intentions of making $2.5bn of efficiency savings across the bank by 2020. $1.5bn of these are due to come from the consumer bank, by the Institutional Clients Group is unlikely to prove immune to what Corbat later said includes 'optimization, streamlining and business process reengineering.'
Equities gaps, mysterious disappearance of hundreds of markets staff: Credit Suisse is cutting costs in its global markets division. The Swiss bank has long aspired to reduce costs there to below CHF4.8bn annually. They were CHF2.5bn in the first half of 2018, down only 1% from last year, suggesting there is still some way to go.
As it cuts costs, there are indications that Credit Suisse is hacking away at staff. - Or is it? As we observed previously, the bank's second quarter results presentation said very clearly that headcount in global markets fell by 350 people in the three months to June, even though insiders are insistent that only "tens" of people were let go.
Either way, there doesn't seem much hiring happening: net headcount fell in every division of CS in the three months to June, with the exception of the corporate centre where 10 people were added.
Hiring seems to have tapered off in Credit Suisse's equities division, where newish head of global equities Mike Stewart presided over a 1% fall in revenues during the first half, despite heavy recruitment last year and a push to achieve a top five position globally. This doesn't mean equities hiring is entirely done though: Stewart will need to replenish his team after various exits to Barclays, where ex-Credit Suisse man Stephen Dainton is busy hiring his ex-colleagues, including - most recently Mathew Cousens and Kevin O'Connor. Chris Marsh, Credit Suisse's head of advanced execution services for Europe, also recently left for UBS.
Credit Suisse therefore has several big gaps to fill in its equities electronic equities team. Meanwhile, CEO Tidjane Thiam is all for the bank's International Trading Solutions division, where global markets staff provide products to private wealth clients. The people here are very 'happy and excited,' said Thiam. Whether the bank is adding to their numbers is another question.
Thousands of job cuts to come, especially in the back office: Deutsche Bank is, theoretically, done with the job cuts in the front office of its corporate and investment bank (CIB). It is not done with cuts elsewhere.
CEO Christian Sewing said in May that he planned to finish cutting front office jobs at the German bank by the end of July 2018. At the end of June 2018, Deutsche revealed that it had cut 1,700 people from the bank as whole in the previous three months, including 983 from the CIB. July's cuts not withstanding, it therefore looks like Deutsche has rather a lot more redundancies to go before hitting Sewing's target of 7,000+ job cuts in total. Middle and back office staff will be next.
Meanwhile, there's very little evidence of hiring at DB's investment bank this year - except when it comes to the inflated graduate class.
Still hiring executive directors, electronic traders and engineers: Despite the imminent arrival of a new chief executive, Goldman Sachs' strategic playbook remains enshrined in the presentation given by then COO- Harvey Schwartz in September last year. - The firm is pursuing an extra $1bn a year of fixed income revenues, $500m each in equities and investment banking (M&A, ECM, DCM), and is hiring in more staff than before from outside.
External hiring remains a focus at Goldman in 2018, with the firm making plenty of new recruits at executive director and vice president level, plus the addition of various new managing directors in areas that have seen departures - like the European macro desk. During the bank's second quarter investor call, CFO Marty Chavez said Goldman is still 'pursuing opportunities' to gain markets share in low touch execution (ie. electronic trading).
New CEO David Solomon may be expected to make some small changes to Goldman's emphasis in light of his background in the investment banking division. However, early indications of Solomon's intentions suggest he's going to keep pushing into systematic trading and flow products, while also expanding Goldman's coverage of mid-market investment banking clients globally.
Ever such quiet hiring: J.P. Morgan seems to be hiring for its corporate and investment bank, but it's keeping pretty quiet about it. The U.S. bank added 109 CIB staff globally in the second quarter. The U.S. bank is busy hiring in China, where it wants to expand its investment banking team by 40% to 50%. Although J.P. Morgan's cash equities hiring is mostly past, the bank is also open to building its European business with selective hires. It added two former Citigroup traders - Mark Coetzee and Gil Peleg in June.
Stealth mode: If Morgan Stanley's hiring, it's not saying much about it. After delivering persistently strong sets of results, the most that is typically uttered by CEO James Gorman is that Morgan Stanley is the right size for the market and that if, "the market is doing well, we’re doing well in that market." Even so, Morgan Stanley has been busy restocking its U.S. infrastructure team and very quietly hired a Credit Suisse crypto enthusiast to be head of digital asset markets in Zurich this month.
Digesting Commerzbank: SocGen is in the grips of what it describes as a "group refocusing" involving some "strict cost control" in its investment bank. There are distinct signs of pain: second quarter revenues in the French bank's equities division were poor and fell two percent even as European rivals like Barclays saw big increases. SocGen said equity derivatives were particularly weak during the quarter, in contrast to Credit Suisse which highlighted equity derivatives as a source of strength.
Even so, changes to SocGen's investment bank in the next six months are likely to be limited to the assimilation of Commerzbank's equity markets and commodities business. In SocGen's second quarter results presentation, the bank said it plans to use the acquisition to become a leading player in Germany and to become a global player in flow products trading.
UBS isn't everyone's cup of tea. We know this because Andrea Orcel, head of the investment bank, said so himself to Financial News in July. "I accept that UBS investment bank and its culture is not for everybody. But if you choose to work here, the expectation is that you are fully committed to the vision, the strategy and the culture,” declared Orcel.
It might be a good thing that not everyone likes working at UBS, because the Swiss bank has been laying a few people off. There were cuts to the rates sales desk last month, including David Steckl, the former institutional head of U.S. rates sales who only joined from Deutsche Bank in mid-2017.
UBS is also hiring though. The Swiss bank is having a big push into the Americas, where it has a "very aggressive plan" for expansion and wants to hire lots of "old fashioned bankers'" with relationships. This might take a while though: Orcel said previously that the bank likes to hire slowly by word of mouth and to give people time to settle in.
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