Are the worst of the investment banking job cuts over? Despite the decline in fixed income currencies and commodities (FICC) trading revenues, there have been few large-scale redundancy announcements (Barclays excluded) for the past 12 months.
However, just because there haven't been many big proclamations of layoffs, that doesn't mean jobs aren't still being extracted quietly. According to the latest report from finance analytics firm Coalition, investment banking job cuts are alive and well. Especially in FICC.
2,400 FICC redundancies in 2014
Coalition's research, which it describes as being based upon publicly available information and, 'extensive validation with industry peers.' is presented in the chart below.
Conclusion: FICC jobs have fallen 9% this year alone and by 13% since 2010. By comparison, IBD (M&A, equity capital markets and debt capital markets) bankers are fairly safe in their seats. So are cash equities professionals.
Which fixed income, currencies and commodities jobs are the worst?
Which FICC jobs are the worst to work in right now? Coalition doesn't break out jobs by FICC business area. However, as we noted earlier and as the chart below shows, you probably don't want to be working in foreign exchange sales and trading in 2014. Emerging markets and G10 rates don't look too hot either. G10 credit and securitization are not so bad. Commodities is actually hot, which explains why banks like Morgan Stanley have been so busy hiring commodities professionals recently.
Where to work now: prime services and equity capital markets
If FX, G10 rates and emerging markets jobs are being crushed, which jobs are being nurtured by increasing revenues?
Try prime services and equity capital markets. As the charts below (also from Coalition), show, this is where revenues have been increasing this year.
Why pay in investment banks is falling
Finally, guess what? Pay for people working in investment banks is falling. Coalition thinks bonuses will be down in FICC and equities this year. The revenue situation is partly to blame, but is the fact that compliance and technology costs have risen.
As the chart below shows, margins in FICC are collapsing. If you want to get paid, the best place to work this year looks like IBD. There, operating margins have increased by seven percentage points on 2013. Coalition thinks that bonus accruals are up there too.