Commodities traders have found refuge in the midst of job cuts: hedge funds. According to a Bloomberg report, departures of commodity traders from banks were up by 10 percent this year, while pay for that group will drop 24 percent on average. Further, the biggest investment banks experience more staff turnover in commodities than in fixed income and currencies.
Macro forces are at play: Financial firms are losing people as U.S. and European regulators seek to limit holdings across raw materials and ban so-called proprietary trading that uses shareholders’ cash. Slowing economic growth and Europe’s deepening debt crisis may crimp earnings and limit compensation for traders.
While the commodity business is booming, these traders’ comps suffer at the hands of a struggling financial industry. Said one recruiter: “You’ve got one institution that is limping along, you get one part of that institution that has made reasonable returns. They aren’t going to be able to pay those staff in the profitable department anywhere as much as they would have done” in a bull market year.
Sales at the 10 largest investment banks’ commodity units rose by 16 percent, compared with a 12 percent contraction across their businesses combined. Meanwhile, assets managed by hedge funds was up 11 percent through November.
Back office Wall Street workers’ loyalty took a hit in the recession. [Bloomberg]
Wall Street banks have moved their holiday parties in-house. [DealBook]
Jefferies Q4 profit was down 23 percent to $39 million. [NY Times]
RBS is close to finalizing a deal to sell $2.2 billion of distressed property loans to Blackstone. [Financial Times]
Italy’s UniCredit will hire an additional 12 banks to help manage its $9.8 billion rights offering next month. [Businessweek]
Belgian-French bank Dexia will sell most of its Luxembourg operations to a Qatari investment group for $952 million. [NY Times]
MF Global’s UK employees have reportedly received threats of violence. [Bloomberg]