If you want to keep your banking job in 2019, you probably don't want to be working on an equity derivatives desk. Or in equity capital markets (ECM). Or in prime services. And maybe not in rates.
So say the new figures for performance by business from banking intelligence provider Coalition. As the chart below shows, revenues fell by around 30% in equity derivatives and ECM in the first quarter of 2019 compared to a year earlier. In prime services, they were down 22%.
This matters because, as we point out in Morning Coffee this morning, banks' CEOs have been saying gloomy things about performance in the second quarter. Coming after a gloomy first quarter and with the threat of further gloom to come, this suggests cost cutting. And cost cutting suggests redundancies. So you probably don't want to be working in an area where revenues just fell off a cliff.
Ok, there may be mitigating factors. In equity derivatives, Coalition says the decline is down to "normalisation" - implying that last year's revenues were simply crazily high. ECM, however, seems more straightforwardly squeezed - Coalition says there was a steep decline in IPOs in the Americas and EMEA; sectorally, healthcare fared worst of all. In prime services there was pressure on margins in the U.S. and lower activity in EMEA.
If these are the most troubled places to work in banking, the least troubled look like M&A, futures and options and commodities, which saw the strongest growth in the first quarter. With the exception of M&A, however, these are tiny business areas. If things continue to deteriorate, there won't be room for many people on these lifeboats.
In the first quarter, at least, there was a stay of execution. Coalition's figures show that banks' headcount was down only 1% year-on-year across fixed income currencies and commodities (FICC), equities, and the investment banking division (IBD). However, with revenues in these business areas falling by 6%, 21% and 7% respectively, this surely cannot last.
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