If you want to be assured of continued employment in a front office banking job in 2019, there are a few preferential places to be right now. Some sales and trading product areas and corporate finance divisions have enjoyed impressive growth. At the opposite end of the spectrum, several have shrunk.
The latest index from financial intelligence company Coalition pinpoints the great and the gruesome for revenue growth in the first nine months of 2018. As banks look to cut costs, jobs should be safest in the highest growth areas - unless, of course, expansion is being combined with automation.
The best front office jobs: Commodities, equity derivatives, G10 FX, prime services, equity capital markets (ECM), cash equities, emerging market (EM) Macro....
If you're looking for a safe job at the end of 2018, you might want to be in commodities trading. As the chart below, based on Coalition data, reflects, commodities sales and trading revenues have risen 32% this year thanks to gains in the power and gas and base metal markets. Less promisingly, Coalition describes these gains as "one off." Equally, commodities trading is tiny ($2.9bn vs. $16.4bn for G10 rates trading), and 2018 was arguably just a return to trend after a dreadful 2017.
Equity derivatives looks more promising. Here, revenues were up 26% on growth in flow derivatives and strategic equity transactions, with the Americas particularly strong.
G10 FX revenues were up 18%, driven particularly by FX options revenues earned on strategic transactions.
Equities futures and options revenues were up 15% (with growth particularly strong in the Americas). And prime services revenues were up 15%, thanks especially to delta one trading desks.
The worst front office jobs: Credit trading, G10 rates
The more precarious front office banking jobs now are in credit and G10 rates trading.
Coalition thinks revenues in credit trading were down 15% year-on-year in the first three quarters of 2018. The entire credit market was caught in the downward revenue spiral: G10 investment grade, G10 high yield, emerging market flow credit and structured credit have all had a bad time.
G10 rates desks have not had a great 2018 either. Here, revenues fell 12% on poor results in flow rates, repo and municipal bonds, particularly in Europe. Coalition says G10 rates trading revenues have shrunk 22% in two years, which may be a cause for worry if you work on a rates desk, particularly as many banks hired heavily here in 2017.
Revenues per head are still highest in fixed income currencies and commodities (FICC) trading
Of course, revenue growth isn't the only determinant of job security. There's also productivity, and automation.
Coalition says 17,300 people worked in front office FICC jobs globally in 2018, the same as at the start of the year. With revenues declining, FICC professionals' productivity fell - but it was still far higher than in any other sector.
Coalition says equities sales and trading desks employed 17,500 people in the third quarter of 2018. Despite rising equities revenues, this was 300 fewer than were employed in Q3 2017. Falling headcount reflects declining cash equities headcount thanks to MiFID II, and the increased automation of equities sales and trading desks. As equities headcount falls and equities revenues rise, this is the only area of improving productivity in the front office.
Lastly, Coalition estimates that there are 17,000 people working in front office roles in investment banking divisions (IBD) globally. This is down 100 on last year. Productivity in IBD is flat on last year.
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