The final quarter of 2015 was abysmal for most investment banks and so far 2016 has been pretty bleak. But within the broader investment banking sector, which jobs are comparatively safe and which are shakier than a New York hot dog stand?
Helpfully, research firm Coalition has just unveiled its analysis of the investment banking sector for 2015, showing exactly which areas struggled and which have fared well. This is what you need to know.
1. Stay away from credit, securitisation and commodities
The fixed income currencies and commodities have, predictably, fared badly. 2014 was bad, 2015 was even worse, but while rates and macro desks saw revenue gains of 4% and 7% respectively, credit slipped by 32%, securitisation by 25% and commodities by 18%.
Within credit, distressed debt and collateralised loan obligations (CLO) were particularly hard hit, while investment grade and high yield did OK. If you work in RMBS or CMBS in securitisation, you’re on shaky ground.
2. No one had a good second half
In the first half of 2015, equities revenues were up by 20%. In the second half, everything was in negative territory.
3. Equity derivatives was the place to be…and prime services
Equities revenues generally held up, but equity derivatives did particularly well with a 16% uplift year on year. Unfortunately, even this didn’t continue into the second half - weak trading conditions in Asia and the Americas started to make an impact. Asia was the primary driver of increased revenues in prime services.
Cash equities did generally well throughout the year, but the fourth quarter had an impact – particularly in America.
4. M&A bankers were the stars
If, as some have predicted, M&A revenues start to wane in 2016, then there’s cause for concern. M&A was up 19% year on year, thanks to EMEA and Americas and drastically increased performance in healthcare, TMT and energy.
However, both equity capital markets bankers – hit by massive declines in IPO activity throughout the second half – and debt capital markets bankers, which were hit by declines in high yield bonds and leveraged finance, more than offset this.
5. Headcount was steady, but not for long
Looking at front office employment numbers for 2015 is a little misleading. Coalition’s figures suggest that just 800 people were let go throughout 2015 – again, predominantly in FICC – which was the steadiest year since it started tracking the numbers.
However, broad cuts unveiled in the fourth quarter across banks like Barclays, Deutsche Bank and Morgan Stanley, suggest there’s still more pain to come.