Everyone wants to open a government bond desk

If one thing was predictable this year, it was an eruption of government bond desks.

European governments are expected to issue €870bn of debt this year and €950bn next year. The issuance process has become more complex with banks now involved in syndications, and the profits to be made from trading government bonds have risen in line with increased volatility and widening spreads between different countries.

Like moths to a very large light, banks are gathering round.

The Wall Street Journal reports that Citadel, MF Global, Jefferies, Scotiabank and Daiwa Securities are all interested in becoming primary dealers in Europe. Santander is said to be building up its gilt trading arm too.

Mark Austen, managing director of the European Primary Dealers Association, says recruitment is inevitable: "If organizations are in the process of applying to become primary dealers, they are going to need to the staff, and they will probably need them upfront to prove their capability."

"You never used to make any money out of government bonds," says one fixed income headhunter. "But with spreads widening and volatility increasing there's now money to be made out of trading and sales, and a lot of people are trying to get into this market."