Are rates sales desks going to get paid this year? Given that both U.S. and European banks identified rates trading as a buoyant area in the third quarter, it might be supposed that they will. However, banking intelligence firm Coalition said revenues on both G10 and emerging markets macro desks fell in the first half, so bonus size might also be down to managers' optimism.
One London headhunter who wants to remain anonymous claims to have an insight into who's expecting to get paid and who's not. He's gathered comparative year-on-year sales performance figures for banks in 2019 compared to 2018. These are shown in the chart below.
Performance measures vary from bank to bank. In some banks they're known as added value, in others they're simply sales credits or a metric measuring the value of the flow a salesperson or team brings to the desk. While they're not comparable between banks, they are comparable within the same bank over a period of time - and (all other things being equal) can act as a proxy for how much people expect to get paid in bonus versus the previous year.
We asked the banks concerned to comment on the figures in the charts. Citi, Nomura, Bank of America, HSBC, Deutsche, BofA and JPMorgan declined to comment and others didn't respond. We can't vouch for their accuracy but several insiders at the banks concerned said they seemed correct. NatWest Markets' salespeoples' strong performance seems odd given a terrible third quarter in which rates revenues fell off a cliff and in light of today's news that the new CEO is planning a shakeup following a strategy review in February. However, insiders point out that sales credits are not the same as P&L and say the bank has generally had a good year and that if anything the chart understates the reality.
The second chart below shows where are the staff are in London hedge fund rates sales. It's all very niche, but the biggest teams are thought to be at Goldman Sachs, JPMorgan and....Barclays.
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