Barclays, UBS, Goldman Sachs, Credit Suisse: hiring and firing strategies for the rest of 2014

So you thought your banking job was safe? Think again. As Deutsche Bank explained in its giant report on the future of European banking earlier this week, banks' revenues might be improving but banks aren't hiring. Worse, they still have plenty of cost cuts still to make.

Which European banks are hiring and which banks are firing? And what are their stated strategies for the rest of this year and early 2015? Based upon Deutsche's report, this is the digested version of what you need to know.

The prospects for jobs and pay at Barclays:

• Barclays is still cutting costs. Between now and 2016, it plans to trim  £1.7bn in total, or to make cuts of 4% per annum.
• Barclays wants to cut 7,000 jobs by 2016. In July, it said it had cut 800 front office investment banking jobs so far.  
• There are no particular hiring plans at Barclays, although the bank has been recruiting to replace M&A bankers in the U.S.
• Deutsche Bank's analysts say that a competitive market for talent means that Barclays is constrained in its ability to cut pay further. However, they predict that compensation will be the key 'balancing number' in the bank's cost cutting plan. If revenues are higher than expected, pay will be higher. If revenues are lower, pay will be cut.

The prospects for jobs and pay at BNP Paribas:

• BNP Paribas wants to expand into Asia and North America while maintaining its position in Europe.
• BNP wants to increase its market share in fixed income currencies and commodities (FICC). It's aiming for a FICC revenue CAGR of 7% until 2016, versus an industry average of 2%. There may be FICC hiring, therefore.
• BNP needs to keep costs in advisory and capital markets business flat in order to achieve its target cost-income ratio of 69%. This is despite increased regulatory costs and despite its investments in Asia and North America. Bankers in Europe look likely to get squeezed.
• Deutsche's analysts say BNP Paribas is also aiming to keep a lid on costs through: 'IT investments, migration of derivatives to central counterparties, process simplification, duplication elimination and technology leverage to adapt platforms/resources.' This sounds good for some technology jobs (unless they're duplicates), and good for change and project management professionals.

The prospects for jobs and pay at Credit Suisse:

• Credit Suisse has been refocusing its FICC franchise on its core businesses of emerging markets, credit, high yield and securitization. FICC jobs outside these areas are being pared back. Rates, FX and commodities professionals at Credit Suisse are being incrementally let go. However, jobs in the core FICC business areas are safe.
• Credit Suisse aims to cut CHF4.5bn from group costs by 2015. Of this, CHF1.85bn is due to come from the investment bank (CHF2.65bn when the investment bank's share of infrastructure costs is added in). The bank also announced an extra CHF0.2bn of cost savings in the investment bank, to be derived by the continued removal of jobs from rates and FX and the closure of its commodities business.

The prospects for jobs and pay at HSBC:

• HSBC isn't making any big strategic changes to its investment bank.
• However, it's been investing in controls and compliance (and hiring controls and compliance professionals), and is encouraging its businesses to work together and cross-sell its products.  HSBC now employs 6,000 compliance staff, up nearly 50% on the first quarter of 2013, despite an overall drop in staff numbers of 2%.
• HSBC isn't planning to make any big cost reductions. But it does want to restrict its cost income ratio to 50%. Given that the cost income ratio was 59% in the first half of 2014, this will likely keep a lid on pay.

The prospects for jobs and pay at RBS:

• RBS's investment bank is being hard hit by a dramatic restructuring process. The bank began restructuring its global banking and markets division (the investment bank in 2008) and has been retrenching ever since.
• RBS has some of the most aggressive cost-cutting targets in the whole market. By 2017, it wants to cut 20% of its ongoing costs to offset an expected 12% reduction in group revenues. Some of these cuts are coming from the disposal of businesses (Citizens Financial), but RBS also aims to cut IT and operations costs by 24% and 'functions' costs by 40%. Expect job cuts in support roles across the investment bank and the bank as a whole. Pay will remain squeezed.

The prospects for jobs and pay at SocGen:

• SocGen's 2014 strategy plan mentioned no changes in terms of the geographies it operates in or the products it offers.
• Deutsche Bank's analysts think SocGen's main purpose is to exploit synergies between its divisions. SocGen wants more synergies between its fixed income and equities sales and trading operations, more synergies between its financing and advisory businesses, and more synergies between asset and wealth management.
• SocGen doesn't have any detailed cost cutting plans for its corporate and investment bank. In fact, the bank managed to keep costs below its target cost income ratio of 65% (it reached 58% in 2012-2013). It could probably even afford to pay more, therefore (our conclusion...).

The prospects for jobs and pay at UBS:

• UBS has a 'niche strategy' for its investment bank. UBS has a 'full service' equities business, but its FICC business includes only FX and just enough credit and rates trading to support its debt capital markets which only provides products to financial institutions and private equity companies.
• UBS is in the middle of a cost cutting programme. In 2012, it announced plans to cut CHF3.9bn of costs across the bank. CHF1.8bn of this has already been delivered, which leaves CHF2.1bn to go. CHF0.7bn of this is expected to come from UBS's 'non-core bank', with the remainder coming from UBS's ongoing operations. Deutsche's analysts predict that a further CHF700m of cost savings will come from the investment bank... Expect UBS to make a continuous flow of quiet redundancies and to keep a lid on pay.

The prospects for jobs and pay at Bank of America, Citigroup, Goldman Sachs, JPMorgan and Morgan Stanley

Deutsche's European banking analysts also provide a short overview of prospects at big U.S. investment banks. In brief:

• Bank of America has nearly achieved its targeted $8bn in annual cost savings. The only trouble is that revenues have declined significantly since the savings were announced back in 2012.
• Citigroup cut $900m from its operating expenses in the first half of 2014 and aims to keep its expenses low in future.
• Goldman Sachs is squeezing pay. Between 2006 and 2007, compensation averaged 46%-47% of revenues at Goldman Sachs. Last year it was 37%. In the first half of 2014 it was 43%, but this is expected to fall significantly in the second half of the year. Goldman Sachs is also cutting FICC headcount - between 2010 and the first half of 2014, GS FICC staff have fallen by 10%.
• JPMorgan is also squeezing pay. Last year its compensation ratio was a mere 30%. However, JPMorgan is also spending on regulatory and compliance staff.
• Morgan Stanley has been restructuring its fixed income business. It's trying to be very disciplined about its compensation and non-compensation costs. In the institutional securities (investment banking) business, Morgan Stanley is targeting a compensation to revenues ratio of 40%. Last year it was 42%. Expect pay to be squeezed....

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