Jes Staley, CEO of JPMorgan's investment bank made a short presentation at the Barclays Global Financial Conference this afternoon.
Much is being made of the fact that Jes said Q3 markets revenues will be down 30% quarter on quarter at current run rates.
This is certainly bad. But it's not disastrous. Markets revenues always fall in the third quarter, even in good years. A 30% quarter-on-quarter drop in Q3 markets revenues at JPMorgan implies a year-on-year reduction of 9%. That's not so dreadful.
What's happening to investment banking revenues is much worse.
In the third quarter, Staley said investment banking revenues could be plus or minus $1bn. If revenues come in around the $1bn level, this implies a reduction of 48% from the second quarter and a reduction of 33% year on year.
This is a significant. Investment banking revenues held up well in the first half of 2011. Banks will have been hoping this would remain the case in the second half: robust revenues in capital markets and M&A would have cushioned the blow from collapsing sales and trading revenues. Suddenly, this isn't happening. Redundancies could be a lot higher as a result.