Morgan Stanley’s fixed income business is not necessarily a happy place. Headhunters say bonuses there weren’t great for 2013, and after staffing-up in 2009 and 2010 to take on the world, Morgan Stanley has been staffing-down in fixed income and accelerating cuts to risk weighted assets (RWAs) in the business.
And yet, you may be better off working for Morgan Stanley’s fixed income business than for Deutsche’s, or Credit Suisse’s, or Barclays’.
The reason is the fast-approaching ‘Foreign Bank Organization Rules’ in the U.S. which Morgan Stanley says are due to be finalized early next week. Under these proposals, European banks will have to hold far more capital in their U.S. subsidiaries than they did in the past. Either that. or they’ll need to cut their RWAs. Either way, it looks bad for fixed income sales and trading businesses which are both capital hungry and involve risky assets of all kinds.
Helpfully, Morgan Stanley’s analysts have put together the following chart showing which banks will be most impacted by the new rules. They won’t actually come into force until July 2015, at the soonest, but that could give you plenty of time to find a new job at a nice U.S. bank…
Source: Morgan Stanley
And if you don’t? Morgan Stanley has this warning on what’s happening to European banks’ FICC market share.