Most banks would still dearly love to hire for their FX desks
While most divisions of investment banks are facing an uncertain future currently, those working on FX desks are in a relatively safe position and some firms are even hoping to expand.
It's no secret that the fixed income currencies and commodities divisions have taken a hammering over the last two quarters and that these divisions have been disproportionately targeted for job cuts.
Within this, however, there's been something of a quiet boom in foreign exchange. In Q3 Deutsche Bank said that it had its "best third quarter ever" in terms of revenues and client volumes.
It was "driven by an uncertain macro environment, rising concerns about the European sovereign debt crisis and big currency moves, such as in EUR/CHF," Kevin Rodgers, global head of FX spot, electronic trading and derivatives at Deutsche Bank in London told
FX Week. The Swiss National Bank's decision to effectively devalue the franc by pegging it against the euro also caused some "gigantic moves" he said.
Strong performance in FX also contributed to a 23% quarter-on-quarter increase in revenues within its FICC division. This was largely due to new investment in FX technology; another area where it's been hiring.
"FX is by its nature tends to be counter-cyclical and it's performed well while other asset classes are struggling, which has unfortunately impacted banks' ability to hire in this area," says Alex Beresford, founding partner at Engage Search. "There's a definite appetite to hire and we expect most investment banks to opportunistically expand in this area, but their ambitions will be curtailed somewhat by headcount restrictions."
Recently, Bank of America Merrrill Lynch, Citi, Credit Suisse and RBS have all unveiled senior FX hires in recent weeks.
This is not to say that the FX desks have escaped cuts entirely. However, Beresford says that any cuts have been comparatively light and limited to "one or two people".
At HSBC, for example, a number of senior sales staff and Rob Babich, the bank's chief foreign exchange spot dealer in New York, were included in the bank's cuts and Credit Suisse laid of its head of FX e-Commerce, Nick Barker.
Meanwhile, a number of senior FX employees at BarCap, Crédit Agricole, Lloyds and RBS have departed in the past month.
"Most clients are asking us to keep a close eye on people coming on to the market as part of the latest cutbacks, because there's an expectation that some high calibre individuals will become available," says Beresford. "We're also seeing a trend where managing directors, who may not be achieving a certain P&L level or are within what is deemed to be an unnecessary layer of management, are being targeted for cuts rather than analysts or associates. Cutting MDs presents a more effective way of cutting costs given the level of base salaries. There are some nervous MDs across FICC currently."
