As we progress deeper into the final quarter of the year, banks are thinking harder about their costs. HSBC is making another round of cuts (8k in the French retail bank, 2k elsewhere), with senior people bearing the brunt of the extractions, and Citi is said to be limbering up for some director-level cuts next week.
Investment banking divisions (IBD) have not had a good year. Although global M&A revenues were roughly flat in the first three quarters according to market intelligence firm Coalition, both equity capital markets and debt capital markets revenues at major banks fell.
However, the top-level perspective conceals considerable variation by sector and region. Some regional sector teams have done fine in 2019; others have had a terrible year.
The charts below are based on figures from Refinitiv, formerly the financial and risk business of Thomson Reuters. They show both the year-to-date value and the year-to-change in value (in percentage terms) of M&A and equity capital markets deals in Europe and the Americas, by sector.
Deal activity in some sectors in each region has been decimated in 2019. As banks look to cut costs in the fourth quarter, these are surely where headcount reductions are most likely to take place.
In M&A, therefore, you don't want to work in consumer staples or telecommunications teams in either Europe or the Americas. Nor do you want to work in industrials, healthcare, materials, financials, or energy and power teams in Europe.
In equity capital markets, you absolutely do not want to be working in media and entertainment teams in the U.S., where deal activity is down nearly 90%, or in Europe, where it's down nearly 80%. Nor do you want to work on European industrials or materials teams, which also saw big drops in deals by value.
So, which IBD jobs in Europe and the Americas are safe now? Try Americas industrials or healthcare M&A (up nearly 90% and nearly 80% respectively), European retail M&A (up 148%). Alternatively, try American real estate ECM and European telecoms ECM deals. These are the safe spots as we enter the danger zone.
Photo by Yung Chang on Unsplash
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