The best and worst places to work in investment banking now

Investment banks are hiring for fixed income again, but it’s complicated. Strategy reviews, business closures or retreats have ensured that despite an appetite to recruit, headcount on the trading floor is still heading down.

“In 2010, if one top 12 investment bank started to recruit in a particular area of fixed income, the rest would have followed,” says George Kuznetsov, head of research and analytics at Coalition. “Now, it’s just the top two or three firms that don't want to be left behind in any one area. There have been so many restructurings in FICC, so few banks are willing to commit to recruitment.”

There’s one exception to this rule, however – credit. Most banks cut back their credit traders last year, and are now engaging in “musical chairs” trying to lure them back again, says Kuznetsov.

“Banks are now seeing the need to replace traders who have left for other banks, or are rebuilding diminished teams,” he says. “Credit is the one area every bank is hiring for.”

Coalition has just released its first half assessment of the investment banking landscape, which suggests that generally headcount is still heading down – although the cuts are less brutal than in previous years. 700 front office jobs have gone over the past 12 months – 400 of these have gone from banks’ equities divisions.

Kuznetsov suggests that it could get worse in the equities divisions. The full impact of MiFID II on banks' research teams has yet to be felt. Most banks are holding off on “headcount optimisation decisions” until they get more visibility on its impact, he says – in other words, more cuts could be coming.

Within advisory functions, headcount is generally stable. A 52% year on year uptick in revenues within equity capital markets (ECM) has not yet translated into an increased appetite to hire, he suggests.

The best places to work within FICC in the first half of 2017 were credit, where revenues were up 14% year on year, and securitisation, which increased by 53%. Specifically, Coalition suggests that non-agency residential mortgage backed securities (RMBS) and commercial mortgage-backed securities were particularly healthy in the first half. On the other hand, commodities is still in the doldrums - a lot of investment banks have pulled back or closed these divisions entirely, but they generated a cumulative revenues of just $1.3bn in the first half - 41% down on last year.

Most banks’ equities divisions continued to suffer this year, but equity derivatives trading revenues were the one stable area. Coalition says that structured products in EMEA and Asia-Pacific were particularly strong.

Contact: pclarke@efinancialcareers.com

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