The party may be over for fixed income, currency and commodity (FICC) professionals. At last week's investor day, JP Morgan said margins in the fixed income business were down 50% and likely to stay that way. US banking analyst Dick Bove says senior traders have told him they're not making money. And yesterday Bove cut his earnings estimates for Goldman on the grounds that trading activity has been disappointing, 'across the board,' in the first quarter; everything was apparently going well until the Greek crisis, at which point volumes plummeted.
But if trading businesses are going off the boil, no one seems to have told banks, who are still merrily hiring for FICC as if it were mid-2009.
Here are this year's biggest hirers in FICC:
Bank of America Merrill Lynch
Headhunters say BofA Merrill has a lot of gaps to fill after Antonio Polverino left last year and proceeded to hire at least 11 of his Merrill colleagues.
Having hired Sanaz Zaimi from Goldman as head of EMEA FICC sales in July last year, BofA is now said to be busy trying to fill its gaps with additional people from Goldman. Earlier this week, the bank promoted Brooks Stevens as head of fixed income futures and options for EMEA.
In January, BofA Merrill hired 10 fixed income traders and salespeople from RBS in Australia. The bank is engaged on a big build across the board in Asia.
BofA Merrill is also going for a
25% increase in global commodities headcount over the next 2-3 years.
London headhunters say BofA Merrill is paying generous guarantees to bring people on board.
As of today, Citi's announced a big push in commodities. Having sold Phibro, it now wants to add 100 front office commodities staff, increasing headcount in the area by 40%.
In October last year, Credit Suisse said it would be targeting growth in rates and FX.
In February, it appointed Jon Kinol from Deutsche as global head of interest rate products. And in January it appointed two senior fixed income bankers in Asia.
Headhunters say Credit Suisse is engaged in the expansion of its 'core' fixed income business.
At December's investor day presentation, Anshu Jain unveiled plans to expand in commodities and algorithmic rates and FX trading.
It emerged today that the German bank has hired Dominic Konstam from Credit Suisse as head of rates research in its global markets unit. Last week, Deutsche hired Dirk Schmitz from Morgan Stanley as head of global markets coverage in Germany and Austria.
Headhunters say Deutsche has additional mandates in the market for rates and credit hires.
Although Morgan Stanley says it's made all but 50 of the 400 sales and trading hires it announced in August, CEO Jes Staley has said that the bank could easily accommodate 25% more staff across currencies, equity derivatives, and commodities. Much of the bank's recruitment effort is likely to be focused on sales rather than trading, however, as it seeks to leverage existing client relationships.
Headhunters say Morgan Stanley's looking to hire in both rates and FX. In January it hired three people for its listed derivatives team, two of whom will be based in the US.
Headhunters say Nomura is building across rates and credit. Last month it poached two senior rates bankers from RBS. And it acquired Guy Cornelius, a senior fixed income salesman who was supposed to be going to UBS.
Nomura's biggest hiring is likely to be in Asia, however, where it plans to add 125 people across fixed income. It's already hired FICC co-heads for Asia, a co-head of fixed income for India.
Nomura has also stated its intention of expanding its commodities business in Europe, and last month bought the natural gas and power trading businesses of Nexen. Additional hires are possible as it seeks to fill gaps in other product areas.
RBS built up its fixed income business last year with the addition of Antonio Polverino and various ex-Merrill bankers. However, it may need to hire to fill gaps created by the departure of existing staff. The exit of Steve Ashley and Chris Fleming has also left it with a big hole in rates, although this appears to have been filled internally.
As we have noted previously, UBS has big (and possibly totally misguided) intentions to double FICC revenues over the next three to five years.
Although the bank has said publicly that it intends to achieve this with miminal hiring, it cut FICC headcount 36% during the downturn, and headhunters say line managers are talking of making hundreds of FICC hires.
UBS evidently wants to recruit - witness its failed attempt to bring on Guy Cornelius. It hired a distressed debt trading team from Credit Suisse in January, plus two senior FICC bankers. However, the bank is said not to be offering guarantees and as we have noted
previously, many of its recruits appear to have been unemployed.