Morning Coffee: Citi demonstrates benefit of culling equities bankers; London banking pay falls 70%

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Citigroup’s second quarter results, released yesterday, should be enough to make equities sales and trading professionals feel more than a little apprehensive. Despite cutting costs and extracting headcount from its equities sales and trading business, Citi achieved an impressive 68% year-on-year in second quarter equities trading revenues.

This impressive result follows Citi’s decision to cut 950 people from equities sales and trading in December 2012. It’s all the more impressive in light of the fact that J.P. Morgan’s equities sales and trading revenues fell by 3% over the same year-on-year period.

In yesterday’s conference call, Citi CEO Michael Corbat said Citi had been, “going at the expense side” of its equities business and had shrunk its headcount and expense base. “The results are improving,” said Corbat, adding that the bank was taking market share.

Citi’s equities sales and trading business is run out of London by Derek Bandeen. Bandeen’s depleted team have reason to feel very pleased with themselves indeed.

Separately, yesterday’s report on high pay in banking from the European Banking Authority has been raising eyebrows. The report, which has only just been released but refers to banking pay across the EU in 2010/2011, shows that almost all the high paid bankers in the EU are based in London. It also shows that pay in London is falling dramatically.

In 2011, there were 2,525 people working in financial services in London and earning more than 1m euros according to the EBA. The closest rival for euro-millionaire-creation was Frankfurt, with just 173 of them, followed by Paris with just 162.

The figures underscore the fact that when the EU passes rules to curtail banking pay, it is really passing rules to curtail pay in London. The EBA’s figures suggested that the EU’s pay edicts have been having some success. Between 2010 and 2011, pay per head for people earning more than 1m euros in London fell from 2.4m euros to 1.4m euros, a 71% decrease. Over the same period, the ratio of bonuses to salaries fell from 647% to 394%. Under the EU’s bonus cap, this will need to fall to a maximum of 250% for approved staff by 2014.

londres EBA

[caption id="attachment_146228" align="alignnone" width="883"]High pay in the UK, source EBA High pay in the UK, source EBA[/caption]


Shares in Citi have risen 95% in the past 12 months. (Financial Times)

Mark Iannotti, who had headed equity research for Europe, the Middle East and Africa at BofA Merrill Lynch has stepped down after a little over a year in the role. (Financial News)

Ex-semi conductor analyst and MD at UBS in New York is now running Nigeria’s sovereign wealth fund. (Ventures-Africa)

Fabulous Fab never called himself Fabulous Fab, says his lawyer. (Financial Times)

38% of bankers with less than10 years’ experience said they'd insider trade to make $10m if the could get away with it. (DealBook) 

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