Heading off speculation about a profit warning, Deutsche Bank has released its fourth quarter results early. They're bad, especially if you work in Deutsche's fixed income, currencies and commodities (FICC) business.
Overall, Deutsche made a loss of €965m in the final quarter. Analysts had expected a profit of €700m. The causes were various: there was a a €528m litigation charge, Deutsche only succeeded in selling €66bn of assets in 2013 when it wanted to sell €80bn, and the investment bank seriously under-performed.
In the investment bank the problem - again, was Deutsche's giant FICC business. FICC revenues fell 31% year-on-year in the fourth quarter. This compared to an increase of 1% over the same period at JPMorgan and a decrease of 15% at Goldman Sachs. Of the big FICC houses, Deutsche's performance was by far the worst. Nor was this the first time that Deutsche came in behind its rivals - Deutsche's FICC revenues fell by 48% year-on-year in the third quarter of 2013, again the worst performance of its peer group.
Where does this leave Deutsche's FICC professionals? Precariously positioned seems to be the answer. The bank has avoided making big FICC redundancies in the front office, preferring to cut costs in operational and middle office jobs. This looks more and more like a mistake.
Separately, the New York Times published a piece yesterday by an ex-Credit Suisse intern and BAML junior who says he became addicted to wealth in the same way that people become addicted to drugs and alcohol. Sam Polk joined Credit Suisse as an intern but went into a full time analyst role at Bank of America, where he rose the ladder as a CDS trader. Polk's pay went from $40k in year one to $1.75m in year four. In 2010, eight years after his Credit Suisse internship, he demanded to be paid $8m instead of $3.6m. And then he left the industry altogether. Today Polk lives in LA with his (attractive) wife Kirsten and runs a business which helps families who are struggling to buy food. "I see Wall Street’s mantra — “We’re smarter and work harder than everyone else, so we deserve all this money” — for what it is: the rationalization of addicts," he told the New York Times.
Deutsche and Citi will be working their interns less hard too. (Financial Times)
Financial services firms in the UK hired another 10,000 staff in the October-December period and are forecast to add a further 15,000 to the job total in the first quarter this year. (Telegraph)
Financial services job vacancies in London fell 42% in December versus November. (Bloomberg)
Morgan Stanley's big FICC pullback. (Reuters)
UBS is outsourcing its fixed income trading platform to Murex and Ion Trading. Jobs are likely to go in the process. (Financial Times)
HSBC has suspended FX traders Edward Pinto and Serge Sarramegna. Citi has suspended Anthony John in London and Andrew Amantia in New York. (Financial Times)
Goldman's return on equity hit a peak of 33% in 2006. Last year it was 11%. (WSJ)
Ed Miliband's destruction of deferred bonuses at RBS (and maybe Barclays) (Telegraph)
Senior figures at RBS say the government is facing a £7bn- £10bn loss on its investment. (Telegraph)
Traders are going down. Investment bankers are going up. (Financial Times)
“A cocktail of zero social life, coffee, propranolol (helps with stress and panic attacks) and modafinil (keeps you up all night),” wrote one UK-based banking employee. Another noted that the “emotional stress” had been reduced since “splitting from my partner.” (Financial Times)
Brokers at Stratton Oakmont (the firm in the Wolf of Wall Street) made a minimum of $250,000 in their first year, progressing to seven figures by year three. Even the switchboard operator earned $80,000. (Telegraph)
A quick summary of US banks’ results. (Twitter)
Study suggests sexual activity can increase mental performance and encourage the growth of new neurons. (Atlantic)