We predict that 2011 will be a wonderful year for...

Failing the fragmentation of the eurozone, a war between North and South Korea and a pre-emptive strike against Iran, 2011 could be good. According to some, it could even be better than 2010.

The persons predicting an improved situation for investment banks in the next 12 months include analysts at Nomura. They foresee an 8% increase in sales and trading operations over the next 12 months (driven by equities). Analysts at Goldman are calling a 10-20% increase in industry-wide IBD revenues on the back of increased M&A and equity underwriting.

The hotspots foreseen by us are as follows:

1) Senior relationship bankers

If all goes to plan, M&A and equity capital markets revenues will increase in 2011. M&A pipelines are robust and much of the activity that should have taken place in 2010 is awaiting initiation.

Despite a lot of senior M&A hiring in 2010, headhunters say there's still going to be substantial demand for senior bankers with client relationships in 2011.

"Everyone's after bigger deals and better wallet share," says one senior M&A headhunter.

"It's not just about M&A, but about trophy hires who have the relationships and can bring in the event-driven deals which make money."

FIG bankers may remain at the forefront of demand. In late December the Bank for International Settlements estimated that the world's biggest banks need to raise $763bn to meet the new Basel rules.

2) Private bankers

As banks seek to diversify away from the capital intensive erratic revenue streams of sales and trading, private banking and wealth management is becoming a popular alternative.

JPMorgan intends to increase its EMEA wealth management staff by 20% a year until 2013.

Barclays Wealth also has an 'aggressive expansion plan' which it intends to accelerate in 2011. Barclays Wealth wants to double its client-facing staff numbers from 650 to around 1,300 over the next five years and is investing 350m across the business until 2015.

3) Equity derivatives

Analysts at Nomura are predicting a 15% increase in equities sales and trading revenues in 2011. With cash equities increasingly commoditised, much of this growth is likely to come from equity derivatives.

"Cash had a bad year in 2010, so banks are looking to increase their revenues from flow derivatives," says Ebrahim Zaheer at Kennedy Associates. "Next year, we're expecting upgrading in flow derivatives across trading and retail distribution."

Banks recruiting in equity derivatives are likely to include Deutsche, which recently hired Dixit Joshi, who's expected to seek to make his mark. Jefferies, RBC and Morgan Stanley could also be hiring.

ETFs in particular are expected to continue their crazy growth, with expansion of 30-40% predicted for the foreseeable future. Pimco, for example, plans to introduce fixed income ETFs into Europe in early 2011.

4) Emerging markets

2011 will be another big year of hiring for emerging markets. "There's going to be high demand next year for people based in London, selling emerging markets products to dedicated London clients," predicts Russell Clarke at FigTree Search. "Smaller houses are going to be hiring quite a bit both in locally-based fixed income sales and London-based emerging market product distribution."

Local hires are likely to take precedence. In November, Jamie Dimon declared himself, "incredibly impressed" by the opportunities in Africa. And in December, the Financial Times quoted Jes Staley, head of JPMorgan's investment bank as saying, "We need to put more capital, systems and people in emerging markets."

Much of this is the continuation of an existing trend. According to Lloyd Blankfein, Goldman's headcount in 'growth markets' has grown at a CAGR of 33% over the past seven years, vs, a business average of 7%.

5) Gazprom and Russia

Gazprom is going to have a big year in 2011. So, more generally, are Russian capital markets bankers.

Gazprom has declared its intention of hiring 600 staff in London for its marketing and trading business. Russia expects to make $32.7bn in the next few years selling off its largest companies.

6) Citigroup

According to analysts at Nomura, Citigroup was one of the only banks to end 2010 with a lower investment banking headcount than it began.

It will make amends for this in 2011.

Citigroup apparently wants to hire hundreds of people into its European investment banking business next year. Headhunters say the focus is likely to be equities and investment banking.

7) Japanese banks in London

Excluding Nomura, various Japanese banks are expected to have a hiring push in 2011. They include Daiwa (all asset classes), Sumitomo (watch this space), and Mizuho (big fixed income aspirations).

8) Internal treasury and risk mitigation

As the reality of Basel III and massive new capital requirements hits home, banks will step up their efforts to mitigate the new rules. This means more emphasis on internal treasury roles, more emphasis

on CVA trading, more demand for regulatory capital expertise.

In December 2010, the Bank of England underscored the increasing importance of internal treasurers by calling for banks to improve their liquidity management.

9) Glencore

2011 should prove a big year for senior executives at Glencore. The commodities trader is planning a 30bn float which will make its 485 partners very rich.

10) Salaries

Salaries WILL keep rising in 2011. In case there were ever any of doubt of this, it has been rendered a certainty by a combination of the Committee of European Banking Supervisors, the Financial Services Authority, and the UK government.

The first has deemed that only 20% of big bonuses earned by risk takers can be paid in cash.

The second has deemed that only 20% of any bonuses over 500k can be paid in cash.

And the latter has deemed that 50% of any bonuses over 150k must go to Her Majesty's Revenue and Customs. As a result, bankers will only receive 50k of their 500k bonuses in cash.

Salaries will unquestionably increase to compensate.