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Investment bank by investment bank, here's who can afford to hire. And who can't

Who still has money?

Most banks' second quarter results are now out. We have a window onto their performance in the first half. The view is not pretty, but some banks are better placed to pick up floating talent in the second half of the year than others.

Broadly, here are the banks that can afford to hire, in descending order.

1. BNP Paribas Corporate and Investment Bank

In theory, BNP's Corporate and Investment bank could be hiring. Its cost income ratio for the first half was only 61%, putting it on a par with JPMorgan's investment bank.

In reality, however, BNP is in the process of cutting 1,400 jobs, so may find its ability to recruit constrained.

Based on its own previous performance, BNP's London-based FICC business did comparatively well in the first half of 2012: revenues fell only 6% year on year. In its equities and advisory business, revenues were down 37%.

=1. JPMorgan's Investment Bank 

Like BNP's Corporate and Investment bank, JPMorgan's investment bank has a cost income ratio of only 61%.

Unlike BNP, it has also been hiring and added 826 people in the second quarter. Its compensation ratio (the ratio of compensation to revenues) was an impressively low 35%.

Relative to its own previous performance, JPMorgan's best performing business this year has been its equities sales and trading business (down 3%). Its worst performing business has been M&A advisory (down 38%).

2. Bank of America Global Banking and Markets 

Bank of America Global Banking and Markets (including Bank of America Merrill Lynch) could also afford to hire. In the first half of 2012, its cost income ratio was 66%.

However, BofA is engaged in the 'New Bac' cost cutting initiative, which will impact the investment bank, and aims to remove 11% of costs from targeted areas.

BofA's FICC business did well year-on-year in the first half (up 7%). Its ECM business didn't (down 47%).

3. Goldman Sachs

Goldman Sachs could probably just about afford to hire. In the first half of 2012 its cost income ratio was 73%. Its compensation ratio was 44%.

However, Goldman is likely to be more focused on cutting staff than adding them. It reduced its headcount by 100 people between the first and second quarters of 2012. It's also increased its targeted cost savings from $1.2bn to $1.4bn, although it says these won't fall unduly upon employees and that it needs to maintain a level of service in all market conditions.

Goldman's DCM business did comparatively well in the 1st half of 2012 and was down only 2% year on year. It's ECM business did comparatively badly: revenues fell nearly 40%.

5. SocGen CIB

SocGen's Corporate and Investment Bank is probably on the cusp of being in a position to hire. In the first half of 2012, the cost income ratio was 72%.

Realistically, SocGen is unlikely to be doing much hiring, however. It's been offering its least desired staff very generous voluntary redundancy  packages (although now says most of its redundancies are over).

SocGen's FICC business has done relatively well year on year in the first half: revenues were up 19%. However, this was mostly due to an outstanding performance in the first quarter.

6. Deutsche Bank Corporate Banking and Securities 

Deutsche probably can't afford to hire for its corporate banking and securities business. In the first half, its cost income ratio was 74%.

Needless to say, Deutsche is making some big redundancies. 1,500 people are going in its investment bank. London and New York look particularly exposed. Nevertheless, analysts at JPMorgan claim Deutsche remains one of the most staff-heavy investment banks around.

Relative to its own previous performance, Deutsche did well in DCM in the first half (down 5% year on year). It did very badly in ECM (down 46%).

7. Citigroup Securities and Banking

We would suggest Citigroup Securities and Banking can't particularly afford to hire. In the first half it had a global cost income ratio of 75%.

8. Credit Suisse Investment Bank

Credit Suisse can't really afford to hire.  The cost income ratio at its investment bank was 81% in the first half. Its compensation ratio was 50%.

=8. Jefferies

Contrary to popular opinion, Jefferies can't really afford to hire either. It also achieved a cost income ratio of 81% in the first half. Its compensation ratio was 58%.

9. UBS Investment bank

You will be lucky to find UBS hiring. Needless to say, it made a loss in the second quarter and achieved a cost income ratio of 88% at its investment bank in the first half. Its compensation ratio was 56%.

AUTHORSarah Butcher Global Editor
  • Oz
    2 August 2012

    Jefferies Investment Banking (M&A, DCM, ECM, sector teams) going through a big cost cutting in London and Germany this week. 18 people cut in the last 3 days, which is a reasonable % of employees

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