Speedy M&A recruitment is now needed

Alongside JPMorgan's overt willingness to heavily shave cash compensation in the fourth quarter, another thing to come out of last week was the need to develop alternative sources of revenue to compensate for the dwindling fortunes of fixed income trading.

JPMorgan registered a 45% drop in fixed income revenues in Q4. And SocGen warned of slowing fixed income revenues alongside the $2.2bn charge it reported on mortgage assets.

But while JPMorgan also registered a 60% increase in M&A advisory revenues in the fourth quarter, SocGen needs to act fast if it's to ramp up its M&A franchise in time for what's widely expected to be a leap in activity this year. Figures from Dealogic cited in Financial News suggest the value of deals announced globally to January 11th was the highest year to date level since 2000, and was up 79% on the same period of 2009.

According to Thomson Reuters, SocGen ranked only 16th for announced M&A deals in Europe last year. However, the bank is seeking to remedy this. In December it said it had hired 15 senior M&A bankers, and that it planned to hire another 15-25 in 2010. Piper Jaffray also intends to hire 60 M&A bankers globally this year. And after recruiting 109 UK M&A bankers in 2009, many of them senior, Deutsche is widely expected to focus on hiring more junior staff in the months to come.

One senior M&A headhunter said there's still a lot of interest in hiring originators. However, anyone hoping to cherry-pick disaffected dealmakers after bonuses have been paid will have to wait until around June once notice periods have expired. With M&A revenues soaring and fixed income revenues plummeting, that may be too late.