2016 is turning out to be the sort of year where investment banking employees globally should hide under a rock until the whole thing blows over. In case you were in any doubt just how tough it's been so far, research firm Coalition has just unveiled its first half report of investment banking activity.
The key takeaways? It's very bad, but there are some places that are safer than others. Here's what you need to know.
1. Advisory roles are the most secure, sales the least
Sales jobs in investment banking are changing dramatically as the trading floor becomes more automated, and so far this year sales has been the most impacted by cuts, suggested Coalition. Specifically, those focused on emerging markets within fixed income currencies and commodities (FICC) and securitisation are particularly suffering.
FICC headcount has shrunk by 1,300 in the past 12 months - and by an astounding 7,900 people over the past five years. In fact, 10,500 front office jobs across the industry have been lost over that period.
IBD is comparatively stable - 1,400 more people are employed in 2016 than at the same point in 2011, but headcount has been slowly deflating over the past four years here and is still significantly down from 19,700 people employed in advisory functions in 2012.
2. Equity capital markets looks like the obvious place to cut
ECM revenues are down 52% across the industry, to $2.9bn, according to Coalition's analysis. The dismal results coming out of this division at large investment banks in Q2 should mean that this doesn't come as a surprise, but this is the worst first half for the past five years and less than half the revenues generated in the past two years. The Americas took the brunt of this.
This is bad, and M&A isn't supporting IBD revenues either - it's down 10% year on year and revenues are at a four-year low. Predictably, given the uncertainty created by the Brexit vote, EMEA revenues have suffered the most. Media, utilities and technology were the top performing sectors. DCM dropped marginally because of weak leveraged loan activity, but APAC was the place to be in this sector so far this year.
3. There's only really one place to be in FICC
Banks' rates teams performed relatively well in the first half with a 19% year on year uptick. This is down to an increase in structured rates and options trading, and stronger activity in the U.S. and...Japan. The 'Brexit bounce' in volatility that helped prop up banks' FX businesses in the second quarter was not enough to stop a 21% year on year decline in revenues, largely thanks to weaker derivatives trading revenues. Credit, despite the 19% decline in revenues, did well in flow products and investment grade, but distressed credit dragged the results down.
4. If you want to trade equities, go to the U.S.
Cash equities revenues were down by 18%, equity derivatives were 30% when compared to the first half of 2015. This is clearly bad, but when you break down further cash equities did OK in the U.S, led by hedge fund trading activity, and both EMEA and - especially - Asia were weak during the first half. Similarly, structured products trading in Asia and EMEA, but equity derivatives revenues were propped up to an extent by flow trading revenues in the U.S.