Lunchtime Links: The carnage in Bank of America's trading business does not bode well
As the dust settles and the effect of one-off items on Bank of America's Q3 results is filtered out, it's become apparent that something bad happened in BAML's sales and trading business last quarter.
Specifically, normalized FICC trading revenues were down 91% year-on-year in the third quarter according to analysts at Morgan Stanley. Overall trading revenues were down 72%. This follows plentiful BAML FICC hiring in Europe last year and is a far larger drop than the normalized revenue reductions at all rivals so far.
To make matters worse, there are suggestions that Bank of America has been struggling to keep its derivatives counterparties happy after Moody's downgraded its ratings in September. The bank has allegedly been moving derivatives from Merrill Lynch to its higher rated retail subsidiary.
Bank of America is due to start scrutinizing its Global Banking and Markets business imminently for the 2nd phase of its 'Project New Bac' initiative. It would be hard for it not to conclude that the markets business needs a trim.
Bank of America only let analysts who like it ask questions on its call. (Alphaville)
European banks have spontaneously decided to shrink themselves by $1 trillion. (Bloomberg)
Raffaele Costa, AKA "Captain Magic," AKA a top salesman at Man/GLG, is leaving. (Financial News)
Deutsche Bank AG and Credit Agricole SA are among international banks withdrawing employees from Dubai as deals dry up, revenue falls and lenders curb costs. (BusinessWeek)
I began my career in London at a US investment bank, but then I witnessed an act of kindness that changed the way I view the world and made me want to do an MBA. (BusinessWeek)
People with lots of Facebook friends have denser grey matter in their brains. (Guardian)
Win 250k by coming up with a plan on how countries should leave the eurozone in an orderly fashion. (Guardian)
Sarkozy: "Those who destroy Europe and the euro will bear responsiblity for resurgence of conflict and division on our continent." (Financial Times)
Libertarian Home, urged protesters to direct their angst at government-driven cronyism instead. (CityAm)
