These are the best places to work in investment banking now

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It’s finally happened; after years of deep cuts to investment banks’ fixed income currencies and commodities (FICC) teams, headcount finally stabilised in the last quarter for the first time in six years.

Investment banks employed 17,300 fixed income professionals in the third quarter of 2017, exactly the same as the previous year – the first time in over half a decade that banks haven’t trimmed a few hundred front office staff, according to new figures released by research firm Coalition.

This seems like strange timing, given that most investment banks posted double-digit percentage declines in FICC revenues during the third quarter. Coalition says that there’s one place to be, however, and that – as we’ve said previously – is in credit. Banks are still trimming across FX, rates and commodities, but have been selectively hiring for their credit teams throughout 2017, which has ensured that the headcount figures remain stable.

Equities and advisory divisions have cut front office headcount, however, with 500 equities professionals departing over the past year and 300 jobs stripped out of M&A, equity capital markets and debt capital markets combined.

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The best places to work in M&A and capital markets now

The vast majority of investment banks have pointed to the massive recovery in their equity capital markets divisions during the third quarter, so it’s no surprise it’s enjoyed the biggest uplift – revenues were up by 37% across the business in Q3.

Coalition says that both U.S. and EMEA ECM bankers have been the biggest beneficiaries of this bounce back in revenues, thanks to an increase in both IPO and follow on activity. Financials and technology were the top-performing sectors.

M&A revenues were up by 11% year on year, but it’s bankers in the U.S. who have received the lion’s share of this. M&A revenues were flat in both EMEA and Asia, says Coalition, and Americas was the top-performing region, particularly within energy, industrials and real estate.

Leveraged finance is the best place to be in debt capital markets right now. Revenues were up globally by a comparatively modest 6%, according to Coalition, to $9.5bn. Leveraged finance was leading this – the top ten lenders in this space have already beaten 2016 revenues.

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Credit and securitisation are the places to be in FICC

Commodities traders are the longest-suffering professionals within banks’ FICC divisions, and revenues of $2bn – 35% down on last year, and half that of the same period in 2015 – help explain why. FX teams were also down by an average of 20% on Q3 2016, while rates sales and trading divisions made $18.7bn, down by 11% year on year.

Credit teams may be expanding, but revenues were largely unchanged compared to Q3 2016, at $11bn. Investment grade and high yield debt both suffered from tighter spreads in the third quarter, but structured products took up some of the slack, said Coalition.

On the face of it, securitisation was the stand-out performer in Q3, with revenues up by 20%. However, Coalition suggests performance was poor across all products, and the increase was just a “normalisation of trading revenues” after a positive first half in 2017.

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Equities is comparatively stable

Compared to FICC revenues, equities revenues within most large investment banks were stable in Q3. The exceptions were Barclays and Deutsche Bank, which posted 24% and 16% year on year declines respectively.

Cash equities trading is still suffering, down 7% year on year after a significant decline last year, with EMEA and the U.S. suffering and Asia-Pacific posting a slight uptick in revenues.

Both prime services and equity derivatives were comparatively flat, however. Delta One trading is down, says Coalition, but the “core” prime services revenue streams are still growing it says. Equity derivatives are still suffering from a lack of volatility in the markets, and are flat on a poor Q3 2016, but structured products bounced back in both EMEA and APAC.

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