Today was BNP Paribas' turn to announce its fourth quarter results. The French bank's fixed income traders were the predictable out-performers: BNP's fixed income sales and trading business rose nearly 60% last year. That's pretty good, particularly when you consider that revenues at Deutsche Bank's fixed income trading business only rose by 28% in 2020 and there's been all sorts of excitement about the likely increase in Deutsche traders' bonuses as a result.
However, Deutsche Bank's moderately performing fixed income traders are in luck. They are no longer encumbered by a struggling equities sales and trading business. - Some of their outsized profits should hopefully flow through to their own pockets. By comparison, fixed income traders at BNP Paribas will almost certainly be called upon to subsidize last year's 41% drop in the bank's equities sales and trading revenues after the "exceptional shocks" (losses) of the first two quarters.
BNP Paribas doesn't break out compensation spending by division, but as Financial News notes, operating expenses in BNP's corporate and institutional bank (CIB) - the investment bank - rose by only 3% last year. BNP has a cost-cutting program in place, but this still doesn't bode well for bonuses. Nor does the fact that while revenues rose 14% in the CIB, profits in the business were up by only 7%. By comparison, profits were up over 500% at Deutsche's investment bank in 2020.
All of this means that BNP's fixed income traders might want to steal themselves for disappointment when their bonuses are announced in a few weeks' time. Complaints are unlikely to be well-received - especially when BNP is in the process of swapping out expensive markets professionals for technologists: the French bank also said today that tech people now account for 37% of the headcount in the investment bank, up from 25% four years ago.
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