Bank by bank, this is what's coming next in 2019
Bank of America: Hiring senior M&A bankers, investing in tech, chasing results in equities
After suffering a 26% decline in M&A revenues last year, Bank of America will spend 2019 trying to staunch its wound. The bank plans to hire up to 50 'senior dealmakers' over an indeterminate time period (whilst seemingly dispensing with some of its existing staff). It wants to focus on deals worth less than $5bn, and has renamed Bank of America Merrill Lynch 'Bank of America Securities' to the apparent horror of some longserving BAML bankers.
In BofA's markets division, the focus will seemingly be on equities after what CEO Brian Moynihan described a period in which the platform was 'retooled' under "Fab Gallo and the team." In January, Moynihan said BofA has been "really pushing" its capabilities in equities and brought on 70 new clients in the fourth quarter.
All of this will be accompanied by ongoing investments in technology and the ongoing pursuit of efficiency. In the meantime, the bank is said to be cutting a few bankers this week.
Barclays: Halfway through electronic platform upgrade, focus on refinancing and corporate derivatives
Last year was all about upgrading the electronic execution platforms at Barclays. This year will bring more of the same.
In last week's call with investors, CEO Jes Staley said Barclays is now, "well over halfway in terms of upgrading....our electronic trading platforms." In the accompanying investor presentation, Barclays said 2019 will see, "continued electronification of Markets business to further increase client flows and market share."
The same presentation said that Barclays will be chasing growth in refinancing and in particular in corporate equity derivatives.
In theory there should be no redundancies at Barclays in 2019 (although never say never). - Staley also told investors that Barclays' corporate and investment is "broadly rightsized" right now.
BNP Paribas: Intensified "transformation" and intensified cost cutting
BNP Paribas has spent the past few years transforming its corporate and investment banking (CIB) business. However, it hasn't transformed it enough. Despite cutting €463m in costs since the end of 2016, BNP has decided that it needs to cut an additional €350m from the CIB before 2020.
Technology and support staff need to watch their backs. In the presentation accompanying its fourth quarter results, BNP said it plans to 'streamline and mutualize' its IT and back office services. It also plans to withdraw from unprofitable and subscale businesses and to close down peripheral locations. More positively, BNP plans to invest in its electronic trading platforms and to improve the performance of its FX and derivatives businesses.
In the bank's fourth quarter investor call, BNP CFO Lars Machenil promised the, "intensification of the industrialization of CIB in order to further structurally reduce cost, particularly through the adaptation of the flow businesses to the fast electronization in financial markets."
Citi: Ongoing 'optimization,' uncertainty on rates desks
Citi hasn't been very granular about plans for its institutional clients group (ICG) in 2019. Across the bank as it plans to pursue its '2020 financial targets', including a 12% return on tangible common equity and an improved efficiency ratio.
If anyone needs to watch their backs at Citi right now, it's probably G10 rates traders. CFO John Gerspach blamed G10 rates traders for the bank's 21% year-on-year decline in fourth quarter fixed income currencies and commodities revenues. By comparison, Gerspach said credit revenues were only down 3%.
Credit Suisse: Still no major cost cutting. Equity derivatives jobs look safest
It might be presumed that Credit Suisse needs to cut costs in its markets business. After all, the business made two major losses in the fourth quarter and exceeded its cost targets. CEO Tidjane Thiam is, however, having none of it. "We want to give the business a chance," said Thiam in the bank's fourth quarter investor call, adding that Credit Suisse's global markets revenues should increase as other banks are cutting costs this year.
Away from global markets, Credit Suisse's strategy also remains unchanged. It's still all about leveraging the relationship between the investment bank and the global wealth management business while 'digitalizing' as much as possible. If you work in 'International Trading Solutions', which sits at the cross section between markets and wealth management, count yourself lucky.
Despite its avowal that "deep" restructuring is over, Credit Suisse will still be tinkering with costs. CFO David Mathers says the bank is still engaged in "process reengineering" of both its front and back office divisions. The safest place at the bank right now is probably the equity derivatives business, where Thiam said revenues increased 111% in 2018. The least safe is probably the global markets business in Asia Pacific, where Thiam says there is still "work to do."
Deutsche Bank: Hiring in fixed income, targeting revenues in FX, cutting costs in the back office, quietly adding in equities
While rumours rumble on about Deutsche Bank's potential merger with Commerzbank, DB bankers are supposed to be chasing revenue growth this year. In theory, cuts to the front office at Deutsche's corporate and investment bank were done last year. From here on in, it's all about expansion.
In the presentation accompanying its fourth quarter results, Deutsche said it plans to grow in "targeted areas." This means FX. It also means "targeted hiring in fix income and debt origination," some of which we have seen already.
At the same time, there are signs that Deutsche is quietly adding heads to its equities business. Global head of equities Peter Selman declared that he was hiring earlier this month and DB has made some big hires in equity derivatives already in 2019.
More ominously, Deutsche has increased its cost cutting target and there's some skepticism that its revenue targets can be met (in which case the bank freely admits that costs may need to be cut more zealously). Bankers in New York are already somewhat concerned about a move to an office with 30% less floorspace by 2022.
Goldman Sachs: Waiting for the front to back review (and tomorrow's redundancies)
Life at Goldman Sachs is on hold while the bank conducts a front to back review of its businesses under CEO David Solomon. The results are due in 'spring', so watch this space. Fixed income currencies and commodities will almost certainly be hard hit - commodities job cuts were flagged last month by the Wall Street Journal.
Insiders at Goldman say a "wave" of redundancies will start tomorrow.
JPMorgan: Squeezing technology spending, investing in low touch trading
Yesterday, JPMorgan's 2019 investor day set out the bank's intentions for the coming 12 months. Now is not the time to work in a JPM technology function where you're building application programming interfaces (APIs) that can be standardized and deployed in a more modular way. - JPM wants to stop building everything from scratch.
Conversely, now is the time to be working in JPM's analytics and visualization teams as it seeks to improve self-service portals for markets clients. Now is also the time to be working on trading algorithms, on optimizing electronic trading systems, in artificial intelligence and on JPM's cloud connectivity.
Morgan Stanley: Selectively adding investment bankers in Asia, adding to China sales and trading
Morgan Stanley says it want to improve the "leadership" and "penetration" of its investment bank this year. Its most recent strategy presentation was short on suggestions on exactly how it plans to go about this, but was specific on growth plans in Asia. MS plans to add bankers in the consumer, IT, media and entertainment, and healthcare spaces in Asia, plus to buildout a Chinese sales, trading and research business.
Separately, Morgan Stanley may be doing less hiring at analyst, associate and vice president level after CEO James Gorman said the bank acted to reduce juniors' bonus-deferral period as it was causing above average levels of attrition.
UBS: Difficult times in M&A
If you're at UBS this year, you don't want to be in M&A. - M&A revenues at the bank suffered horribly last year even after Sergio Ermotti squeezed his bankers to do more (e.g. by instructing them to have at least 300 face-to-face client meetings a year.) At the same time, however, UBS's 2018 investor day promised "limited incremental resources" as it seeks to grow its advisory and ECM businesses (particularly in the U.S.). UBS bank also plans to grow its U.S. equities business, to build a "digital investment bank" and to strengthen its capabilities in China.
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