The one place to work in investment banking now

Investment banks have stopped making massive cuts to their fixed income divisions, but there’s only one place where they’re really hiring – credit trading.

“There’s not a single investment bank that’s not speaking internally about competing in credit trading,” says Amrit Shahani, research director at Coalition. “There’s been strong enough revenue growth consistently to generate hiring.”

Coalition has just released its quarterly index for investment banking, and headcount is still heading down in the front office, despite the stellar first quarter for most firms’ fixed income divisions.

In the first quarter of this year, 300 roles disappeared across banks’ FICC, equities and investment banking divisions during the first quarter of 2017, it says. Overall, 1,900 revenue-generating jobs have gone from top investment banks since Q1 last year, and nearly 13,000 roles have disappeared over the past five years.

“Generally, banks have stopped cutting, except in equities – particularly in Asia – but a lot of cuts in the second half of last year were booked in Q1 2017,” says Shahani.

Year on year, credit revenues were up 65% year on year across the 12 large investment banks Coalition tracks, to $4.7bn. This is still equal to the revenues generated in Q1 2015, and far less than the $7bn+ in the first quarters of 2012-14.

“Smaller banks like HSBC, UBS and BNP Paribas are staffing up in credit. Everyone is trying to compete,” says another research analyst who declined to be named.

Smaller players have clout when it comes to hiring – BNP Paribas, for example, has just poached Goldman Sachs bond traders Robert Boeheim and Eusta Qin. Isabel Mahony, the former co-head of credit trading at Morgan Stanley, joined Japanese bank SMBC Nikko Capital Markets earlier this week.

Elsewhere, investment banks are also hiring for their G10 rates trading teams, although Shahani says it’s much more selective.

Kumaran Surenthirathas, founder and managing director at headhunters Rosehill Search, which focuses on FICC, says banks are “hiring but not expanding”.

“One good quarter does not warrant the huge costs of expansion. They’re still making less money than they were ten years ago, juniorisation is still happening and a good quarter means that people aren’t getting fired. Hiring is still very selective,” he says.

Shahani says that banks FX desks continue to shrink because of "electronification and smaller tech savvy players gaining market share", while commodities - where revenues declined by 29% year on year - is in "structural decline".

"What we're seeing now is a general improvement from a very low base," he says. "The second half of last year was strong, so if we see improvements for the last six months of 2017 it's likely that banks will start hiring again in more significant numbers."

Contact: pclarke@efinancialcareers.com