If, as seems likely, banks decide to cut costs yet again in the final four months of 2019 before bonuses are paid, there are a few places you probably don't want to be working. These include any banks with an abnormally high cost base and any business areas that have seen undue levels of revenue shrinkage.
We addressed the first issue last month using the spider charts issued on a quarterly basis by market intelligence firm Tricumen. Today we address the second issue using the data also issued on a quarterly basis by Tricumen's (larger) rival Coalition.
If you work for a large bank, Coalition's figures don't make for easy reading. Combined revenues across all major divisions - fixed income currencies and commodities (FICC), equities, and investment banking divisions (IBD), fell in the first half of 2019 vs 2018 and were at their lowest level since 2006.
Worse, revenues in every single subcategory of these divisions also fell over the same period, as per the chart below. The biggest fall (-25%) was in equity derivatives. The smallest (-1%) was in commodities. Neither equity derivatives, prime services, nor G10 rates look like happy places to be in the third and fourth quarters.
For all their famed myopia, however, banks may not pull the trigger on cost-cuttings just because of a difficult six months. The most precarious jobs now are likely to be in those business areas which have seen revenues shrink consistently for years. It's here that some banks might start to question their commitment. On this basis, structured credit, structured rates and debt capital markets look shakiest based on Coalition's figures in the chart below.
Tricumen provided its own breakdown of bank-by-bank performance by business in the first half of this year compared to 2018. Shown in the chart below, this suggests that Deutsche Banks' rates, prime services and equity derivatives businesses are in the eye of the storm and are having a difficult year in a difficult market, that HSBC is experiencing something similar in credit, that GS is also struggling in rates and that every big bank but RBC and SocGen is struggling in equity derivatives.
Photo by Marvin Esteve on Unsplash
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