Late Lunchtime Links: Citigroup reveals how low profitability has become in European investment banking

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At last, some good news from Asia: Citigroup's investment banking business is doing very nicely there. The bank's first quarter results, out today, reveal that revenues in Citi's securities and banking business rose 12% year-on-year in Asia in the first quarter. Nor was this growth at the cost of lower profit margins: net income in Citi's Asian investment banking business rose 43% over the same period; Asia is now Citi's second most important source of investment banking profits after North America.

Is Asia picking up? Maybe. Citi's Asian investment banking revenues were up a particularly impressive 60% compared to the final quarter of 2012.  However, at $1.4bn Asian revenues remained substantially below North American revenues ($3bn) and significantly below EMEA revenues ($1.9bn).

In a report released last week, Morgan Stanley and Oliver Wyman said that both Asia and Europe are less profitable for investment banks than the Americas.  Citi's revenues confirm this. In the first quarter, Citi's securities and banking division achieved a profit margin of 40% in Latin America, 39% in North America, 33% in Asia, and only 28% in EMEA. One regional market looks particularly unappealing from a profitability perspective...


Citigroup did better than expected in fixed income trading and investment banking. (Bloomberg) 

Lloyd Blankfein is being incentivized to achieve a 10% average return on equity and 7% average increase in book value per share. (Bloomberg) 

Kareem Serageldin admits to mispricing CDOs, says he did it, ‘to preserve my reputation in the bank at a time when there was great financial turmoil in the marketplace." (Independent) 

B of A has hired a global head of capital introductions from UBS. (Bloomberg) 

The European banking system is almost as leveraged as Lehman, before Lehman collapsed. (Aktiva)

Average Lehman administrator at PWC is billing £730k a year. (The Times)  

Lloyd Blankfein made $21 million in compensation in 2012, up from $12 million in 2011. Gary D. Cohn, his second in command, made $19 million last year, up from almost $11.9 million in 2011. (DealBook) 

Their bonus determined the respect they received. And yet, every last person felt poor. (NickChirls) 

No one seems to have money any more, despite, on paper at least, earning enviable salaries. (DailyMail) 

Ex-drugs tsar says banking crisis spawned by bankers taking too much cocaine. (Telegraph) 

Caffeine intoxication is a diagnosable mental disorder. (Slate)