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The most dangerous banking jobs beyond Credit Suisse

Beware the potholes

You don’t need an MBA to know that investment banking isn’t in a great place right now.

Despite some strong performances from trading desks, core IB (advisory and underwriting) revenues have taken sharp downturns in Europe, America, and APAC.

Job cuts have resulted from these downturns. Credit Suisse has been the one on everyone’s mind. The bank is aiming to cut 9,000 jobs – in everything from FX trading to parts of its wealth management team.

Credit Suisse isn’t the only one, however - Deutsche have done some trimming, as well as Goldman Sachs. But where is the guillotine going to fall next?

Tricumen might give an indication. The London-based firm acts as a consultant to a variety of firms in the financial services industry, but is best known for its spider charts breaking down operating revenue per employee, per division, per bank.

Although the charts show how banks performed proportionally to each other, they do not show the extent to which average revenue per head has fallen since 2021. 

Anything outside the dotted line on the charts is better than average. The closer to the middle of the chart, the worse the performance relative to the mean. 

Investment Banking - Operating revenue per employee, 9M2022

Across M&A, ECM and DCM, American bankers were the most productive, with Wells Fargo, JPMorgan, Morgan Stanley, and Goldman Sachs far outperforming the global average.

By comparison, European bankers had some of the worst IB productivity, with Deutsche Bank, HSBC, and SocGen some of the least productive bankers, along with UBS and Credit Suisse.

Generating low revenues per head looks dangerous in this market. Most banks have suffered significant drops in their investment banking revenues this year. On a per-head basis, Tricumen says the biggest drop in revenues across the industry this year was in equity capital markets (ECM), where they fell a colossal 80% versus 2021. By comparison, the industry-wide drop in revenues per head was just 10% in M&A. 

If you're at a bank where revenues per head are already low, and then they fall further, you will be particularly exposed. 

FICC - Operating revenue per employee, 9M2022

Fixed income traders have had a better year, but here too, some are far more productive than others.

In terms of revenue per head, fixed income traders performed strongest at Deutsche Bank and Goldman Sachs, as well as JPMorgan and Morgan Stanley; Barclays and Citi traders performed averagely. 

Fixed income traders at Credit Suisse, as well as HSBC and BNP Paribas, performed poorest, with revenues per head significantly below average. Traders at Royal Bank of Canada and SocGen also generated comparatively low revenues per head. If Credit Suisse is trimming traders, why not these banks too? 

Across the industry as a whole, Tricumen said revenues per head were more or less flat in the first nine months this year in FX, Rates, and Credit traders (moving 9% down, 6% down, and 10% up respectively). Commodities traders are set for a bumper year; their revenue per head was up nearly 40% on 2021 over the same period. FICC as a sector saw a 13% increase in revenue per employee.

Equities - Operating revenue per employee, 9M2022

Equities provided a mixed bag of results for banks, with traders in America once again generating strong revenue per person – traders at Goldman, JPMorgan, Morgan Stanley, and BofA performed the strongest. 

However, equities traders at HSBC, RBC, and Credit Suisse equity traders all generated comparatively feeble revenues per capita, as did Wells Fargo.

Equities trading had a more stable nine months compared to other banking sectors. Across equities sales and trading as a whole revenues per head were down only down 3.5%. They fell 17% for cash equities trading, and 5% for derivatives trading. Prime services revenues per head were up 13%.

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AUTHORZeno Toulon

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