With U.S. banks showing little revenue growth in the first quarter, Wall Street will continue to pare down operating expenses in an effort to “eke out the bottom line,” says banking analyst Meredith Whitney.
Speaking to Bloomberg TV, Whitney didn’t sound the mass layoff alarm like she did last fall, noting instead that banks will continue a “slow bleed” of staffers. “There’s growth out there, but for the majority of financials it’s an anemic growth environment,” she said in the interview.
It’s difficult to blame banks for the strategy. If results from the last two quarters tell us anything, it’s that cost-cutting may be the most effective way for chief executives to pull out small victories from their balance sheet.
Citi’s first-quarter net income rose 30% year-over-year to $3.81 billion, due partly to the bank’s effort to gash its ratio of expenses to revenue. Barclays made big cuts to its investment bank and saw an 11% uptick in profit in the division. UBS slashed its fixed-income unit and came out smelling like roses. Now, speculation is mounting that second-tier FICC players like Morgan Stanley, Royal Bank of Scotland and HSBC may soon feel compelled to follow suit.
Whitney wasn’t all gloom and doom though. She said Bank of America shows the “most upside” as it’s already on the backend of its cost-cutting initiative. Hopefully rival banks will get there sooner rather than later.
U.S Bankers Trump Europeans (eFinancialCareers)
The average bonus for associates at U.S. investment banks in 2012 was more than 60% larger than that of their European brethren, according to a new survey. European banks softened the blow, however, by paying mostly in cash.
SAC At It Again (Bloomberg)
SAC Capital is once again under investigation. A Republican senator has sent a letter to the hedge fund questioning its dealings with political intelligence firms that have proven effective in predicting government decisions, like last month’s Medicare announcement that sent insurance stocks skyrocketing.
Split-Second Advantage (WSJ)
The Chicago Mercantile Exchange has a latency problem, giving high-speed traders connected to the exchange’s computer system access to information milliseconds before the public. They’re using that time to their advantage, identifying direction prices commodities are moving and adjusting their strategies accordingly.
As Explained By Goldman (Business Insider)
If you’re planning on taking the CFA next month, be prepared to know this return on equity formula cold.
No Double Jeopardy (FIN Alternatives)
Sergey Aleynikov, the Goldman Sachs programmer convicted of downloading parts of the firm’s software on his last day of work, is set to face trial yet again. Aleynikov had his original conviction thrown out last year.
Doubling Up (Financial Times)
Jamie Welch, the head of Credit Suisse’s European investment banking arm, will leave the firm at the end of June. He’ll be replaced by two current execs: Marisa Drew, co-head of the global markets solution group, and Ewen Stevenson, co-head of the global financial institutions group.
Edward Feigeles, a former private wealth management exec at Morgan Stanley and Lehman Brothers, has died. He was 58.
Buzz Around the Office
Donald’s Do (The Daily Mail)
Those of you who thought Donald Trump’s hairstyle was one of a kind, our condolences. He clearly stole it from this Amazonian caterpillar.
List of the Day: Networking Mistakes
When networking, whether online or in person, avoid these common pitfalls.
- You take but never give.
- You don’t follow up with a thank you note.
- You rely too much on the Internet.