If job cuts come, here's where they'll happen

This may be unnecessarily pessimistic on a Friday afternoon, but in the spirit of preparedness/paranoia, here's a brief heads-up on where it seems possible that job cuts could happen later this year if things go badly.

1) MF Global

This is a no brainer. MF Global staff must be ruing the day they set sights on Jon Corzine. After only joining in March, Corzine has announced plans to freeze hiring, cut compensation, and eradicate up to 480 jobs out of the current 3,200. Some of those cuts are likely to fall in London.

2) ECM

ECM businesses have been given a slight reprieve by this week's announcement of a rights issue from the National Grid, and the resumption of the Prudential Rights Issue.

While around 30 banks will benefit from the 850m of fees related to the Prudential Rights Issue, the biggest share will go to Credit Suisse, HSBC, and JPMorgan as the lead underwriters. ECM bankers at these places should be totally fine.

So should ECM bankers at BofA, Morgan Stanley and Deutsche Bank, who will be sharing the estimated 100m in fees flowing from the National Grid's rights issue.

ECM bankers elsewhere may be feeling a little uncomfortable. It would be interesting to be a fly on the wall at Barclays Capital, which has spent heavily on ECM, but failed to rank in the European top ten for ECM fees year to date according to Dealogic. Equally, Dealogic's figures suggest BNP Paribas's ECM team may not be a happy place: its share of European ECM fees is down to 4% year to date, from 7% last year.

3) M&A

As we noted the other day, European M&A fees are down 64% year to date on the same period last year.

Deal activity in Europe this year has centred around the financial, energy and power and healthcare sectors. Unless activity picks up soon, which seems unlikely, bankers in other sectors may have reason for restraint when it comes to this year's summer holiday bookings.

4) DCM

Yes, high yield has been looking good in Europe so far in 2010, but as this chart makes clear, it hasn't been so great over the past two weeks.

Fortunately, high yield teams are already fairly lean. Investment grade teams may suffer more from a prolonged shutdown.

5) Complex OTC derivatives

The US Senate's banking reform bill proposes to route as much OTC derivatives trading as possible through exchanges, electronic platforms and clearinghouses.

In a note released last month, analysts at Bernstein Research predicted that if such a measure went ahead, OTC derivatives that couldn't be priced and settled centrally would incur higher regulatory capital charges that would constrain trading volumes.

Bernstein's analysts predicted that some of the complex OTC derivatives business could shift to non-US financial centres as a result. However, it seems likely that off-exchange OTC derivatives trading will be subject to higher capital requirements in London too. Trading volumes are likely to fall as a result, fewer people will be needed, jobs will....go.