Today was RBS results day. Things didn't look good for the markets division, where revenues fell 40% and profits fell 64% compared to the first quarter of last year. As with other banks, the rates business seems to have been at fault: RBS rates revenues fell 65%.
Profits and revenues aside, there are some signs that RBS's investment bank may be in difficult waters. Already a comparatively low payer, RBS cut compensation per head in its investment by 30% in the first quarter of 2013 versus the same quarter of 2012, to £31k ($48k). This compared to average pay per head of $107 in UBS's investment bank, or $136k at Goldman Sachs.
Unless things pick up a bit, RBS may be compelled to cut compensation even further. The dramatic decline in revenues at the British bank meant that proportion of revenues allocated to compensation went from 29% in the first quarter of 2012 to 37% in the first quarter of 2013. The clear danger for RBS is that the more it cuts pay, the more it loses senior staff and the more its revenues will fall in future. A vicious spiral is a possibility.
Separately, Sergio Ermotti, chief executive of UBS, has conceded that there may be some crazy people at the bank. Ermotti participated in a panel discussion at the St. Gallen Symposium in Switzerland, reported the Wall Street Journal. There, he suggested it was difficult to ensure every member of staff in an organisation of 60,000 was entirely sane: “Of course there are going to be some people who are crazy. No matter how well we screen”.
Court finds that ex-head of CDO trading at RBS was unfairly fired. (Bloomberg)
After slashing staff and centralizing back office functions, Macquarie achieved a big increase in profits. (Financial Times)
BNP Paribas’ investment banking revenues down 25% year on year. (Reuters)
BNP Paribas will continue making redundancies. (Reuters)
US banking revenues are the strongest, says BNP Paribas. Followed by Asia. Followed by Europe. (Bloomberg)
Lazard has hired Larry Slaughter, an M&A banker who spent 26 years at JPMorgan. (NY Times)
Senior civil servant warned George Osborne that he would face embarrassment unless Goldman Sachs was kept happy. (Independent)
Man Group said AHL's funds are still 4.5% away from their high water mark at which point they can start earning performance fees. (Evening Standard)
Twitter has hired Cynthia Gaylor, a senior tech banker from Morgan Stanley. (WSJ)
Ashley Jarvis, global co-head of prime broking consulting at UBS, is leaving. (Financial News)
People spend 50 seconds looking at job adverts before dismissing them as irrelevant. (WSJ)