Lunchtime Links: Actually, investment banks' FICC revenues may deteriorate badly in the second half

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Robert Peston contemplates Bill Winters

Robert Peston contemplates Bill Winters (Photo credit: Wikipedia)

Fixed income hiring hasn’t really been too bad in the first half of the year. While equities headhunters say there’s really not much going on, fixed income headhunters have been slightly more positive. FX in particular seems to have been at the centre of quite a bit of hiring.

Kian Abouhossein, JPMorgan’s prescient banking analyst, foresaw all this and more. Back in February, Abouhossein declared that this would be a good year for FICC and that revenues across fixed income currencies and commodities trading would increase 31% this year.

In the circumstances, it’s therefore a little worrying that Abouhossein has now changed his mind. He no longer things FICC revenues will increase 31% in 2012: he thinks they’ll increase 2%. And in the second quarter of this year he thinks they’ll fall 32% versus Q1.

Why the change of heart? “Deteriorating macro newsflow is leading to increased risk aversion,” says Abouhossein. A potential repeat of the second half of 2011, when FICC revenues fell 48% due to low liquidity and high volatility cannot be ruled out, he adds.

None of this sounds like good news for FICC hiring. Nor are equities or IBD expected to emerge as compensatory sources of recruitment activity. Kian thinks they're going to decline too (and by more across the year as whole. The newly gloomy prognosis is summarised in the chart below.


JPMorgan’s losses could actually be in excess of $7bn. (Independent) 

An argument suggesting JPMorgan's derivatives losses may really be... $31.5bn. (Zero Hedge)  

Should JPMorgan have listened to Bill Winters? (Robert Peston)

AIB’s voluntary redundancy plan now fully clarified. (Irish Times) 

Bank of America has hired Lazard’s former head of UK banking to run its global healthcare business. (Financial News) 

Nomura wants to build its US equities business and has signed a new office lease which will allow it to increase total US headcount 50% from 2,350 currently from 2013. (Financial News)

HSBC has indefinitely postponed any plans to leave the UK. (Telegraph) 

At one point, 75% of quant teams in London were French. Now the French quants are going back to Paris, sometimes to teach. (The Daily Beast) 

Ex-Goldman trader starting a ‘new’ sort of quant fund weaving fundamental analysis and algos is into transcendental meditation, plans to promote in the quant community. (WSJ) 

Luke Ellis left FRM to raise pigs in 2008. In 2009, he stopped raising pigs and joined GLG. (The Times) 

15 phone interview questions interviewers like to ask. (Douglas Chan) 

“It is like fighting a war with a water gun, ” one banker involved in the Facebook underwriting process said. (New York Times) 

Albert Edwards has 20% of his personal assets in gold, “not to get rich … just to make sure I don’t get poor.”  (Toronto Globe and Mail) 

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