Without getting too mired in the debate over whether the current fixed income currencies and commodities (FICC) rout is a cyclical or secular issue, it's clear that banks are susceptible to changes in the economy. Goldman Sachs executives regularly reflect upon the firm's exposure to the economic cycle. Increasing GDP means more M&A and capital markets activity. Low interest rates mean less volatility and less fixed income trading.
This being the case, you may want to work for a bank that does ok whatever the weather, rather than for one that goes from boom to bust. If so, the chart below, from banking intelligence firm Tricumen, may prove illuminating.
For those of you who are unable to decipher the arrows, the section on the left shows the variance of capital markets revenues (defined as all sales and trading and all M&A and equity capital markets and debt capital markets revenues) between the first quarter of 2010 and the first quarter of 2014. During this period, revenues at Goldman Sachs, Deutsche Bank and Bank of America Merrill Lynch (BAML) were by far the most volatile. Revenues at Barclays and Credit Suisse were the least.
The chart on the right shows the volatility of banks' revenues since the first quarter of 2012. This shows that Goldman is still the most volatile, but that while Goldman's revenue volatility has fallen, Deutsche's has risen. Credit Suisse still looks the most safe and Barclays' procyclicality is increasing.
The sharper-eyed among you may question whether stability of revenues across the cycle is really reflective of job security. Despite having some of the most volatile revenues, both Deutsche and Goldman Sachs have been among the slowest banks to cut staff. By comparison, the comparatively stable Barclays and Credit Suisse are axing people as we write.
The Credit Suisse commodities reversal and why you mustn’t listen to banks when they say your job’s safe
Credit Suisse jobs: what’s safe, what’s not, why you should be worried now
Barclays will now be hiring, paying and appreciating precisely these people in its investment bank