Credit Suisse, Barclays cut jobs, hiring freeze likely in banking
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“Now that trading revenues are dropping there’s a hiring freeze on,” said John Purcell, managing director at executive search firm Purcell & Co in London. “I wouldn’t be surprised to see people shedding traders again.” Barclays Capital said last week income from trading bonds and commodities fell 40% in the first half amid the sovereign debt crisis. Fixed-income, currencies and commodities trading was the biggest revenue contributor at investment banks from Deutsche Bank AG to Goldman Sachs Group Inc.
The decline marks a reversal from 2009, when banks were able to boost trading revenue to a record by borrowing cheaply from central banks to invest in higher-yielding government bonds, allowing them to replace the bankers they fired during the credit crunch. The sovereign debt crisis caused bonds of Portugal, Greece and Spain to plunge, making the trade less profitable and made investors more cautious in taking on risk.
At the same time, revenue from advising on mergers and stock offerings tumbled. The pace of mergers in Western Europe dropped 9% in the second quarter from the previous three months, while the value of European share sales fell 27%, according to data compiled by Bloomberg. In all, investment banking fees in Western Europe slid 23% in the first half, according to New York-based research company Freeman & Co.
“It’s a tough market for investment banks at the moment,” said Christopher Wheeler, an analyst at Mediobanca Securities in London. “Equity issuance is low and debt issuance fell off a cliff in the second quarter. Freezes won’t be odd.”
Barclays Capital added about 3,600 people in 12 months to June 30, while Credit Suisse hired 1,800 and RBS’s securities unit increased headcount by approximately 1,100. In March, UBS AG chief Oswald Gruebel said the bank hired about 350 fixed-income traders over the preceding 12 months. Credit Suisse and Barclays Capital said they plan job cuts. Credit Suisse said it will eliminate 75 posts in the UK. Barclays Capital is cutting 300 administrative jobs, a person with knowledge of the matter said at the time. Barclays plans to recruit in its growth areas, a spokesperson said.
The decline marks a reversal from 2009, when banks were able to boost trading revenue to a record by borrowing cheaply from central banks to invest in higher-yielding government bonds, allowing them to replace the bankers they fired during the credit crunch. The sovereign debt crisis caused bonds of Portugal, Greece and Spain to plunge, making the trade less profitable and made investors more cautious in taking on risk.
At the same time, revenue from advising on mergers and stock offerings tumbled. The pace of mergers in Western Europe dropped 9% in the second quarter from the previous three months, while the value of European share sales fell 27%, according to data compiled by Bloomberg. In all, investment banking fees in Western Europe slid 23% in the first half, according to New York-based research company Freeman & Co.
“It’s a tough market for investment banks at the moment,” said Christopher Wheeler, an analyst at Mediobanca Securities in London. “Equity issuance is low and debt issuance fell off a cliff in the second quarter. Freezes won’t be odd.”
Barclays Capital added about 3,600 people in 12 months to June 30, while Credit Suisse hired 1,800 and RBS’s securities unit increased headcount by approximately 1,100. In March, UBS AG chief Oswald Gruebel said the bank hired about 350 fixed-income traders over the preceding 12 months. Credit Suisse and Barclays Capital said they plan job cuts. Credit Suisse said it will eliminate 75 posts in the UK. Barclays Capital is cutting 300 administrative jobs, a person with knowledge of the matter said at the time. Barclays plans to recruit in its growth areas, a spokesperson said.
