As a follow-up to yesterday’s look at JPMorgan’s deteriorating predictions for investment banking revenues in the second half of this year, we’d like to highlight two further elements of Kian Abouhossein’s latest oeuvre: employee affordability and IBD performance for the year to date.
Who’s spending too much on their staff?
Abouhossein’s report contains the table below, tracking investment banking compensation as a percentage of revenues. At the end of 2011, one thing was clear: the Swiss banks (UBS and Credit Suisse) were paying too much, with Credit Suisse especially looking a little out of control. Morgan Stanley looked out of kilter too.
The challenge now is to reduce pay as a percentage of money coming in. Abouhossein and his colleagues think this will happen almost everywhere, except possibly BNP Paribas.
Who’s losing and gaining share in IBD?
Separately, JPMorgan highlighted the evolution of markets share in ECM, DCM and M&A between 2011 and year to date 2012.
In DCM, the ranking is remarkably similar – except HSBC has dropped off. In ECM, Morgan Stanley has been supplanted by JPMorgan and Goldman Sachs, Credit Suisse has gained share and Deutsche and Citi have swapped places in the ranking.
In M&A, Goldman Sachs continues to lead and the likes of JPMorgan and UBS have lost out. BarCap, however, is still doing rather well.