As we’ve seen, the troubled investment banks of the world were laying people off in droves before the coronavirus pandemic struck, and cannot wait (and sometime aren’t waiting) to get right back to their firings just as soon as they can. Even some non-troubled investment banks have gotten into the fun, just to be safe. But, it turns out, one need not be in desperate straits or overly cautious to realize that you can make a ton of money with many, many fewer people to pay.
Revenues at the largest U.S. and European investment banks were $44 billion, up 12% compared with the same period last year, according to a new report from data provider Coalition. Jobs in the front office, however, fell by 6% to 49,000 over the year…. Investment banks have invested billions in technology to replace old systems and automate processes, making bankers redundant. Neither that spending, nor the layoffs, show signs of slacking. Many staff are working from home and that also has senior managers considering new ways to trim costs.
ABN Amro Bank NV, a Dutch lender nationalized during the 2008 financial crisis… said Wednesday it booked a €1.1 billion ($1.2 billion) charge related to a U.S. client unable to meet a margin call on a loan, a possible fraud case involving a client in Singapore, as well as impairments on loans to sectors badly hit by the crisis such as oil and gas and leisure.
That swung the bank to a first-quarter loss of €395 million from a €478 million profit a year ago. Shares of the bank fell more than 7%.
Top European banks’ share of global trading revenues has fallen to its lowest level in more than five years…. BNP Paribas, Barclays, HSBC, Société Générale, Deutsche Bank, UBS and Credit Suisse shared just 34 per cent of big banks’ $33.9bn trading revenues in the first quarter of 2020…. BNP’s equities and hedge fund servicing division swung to an $87m loss in the first quarter, and SocGen’s equities division suffered a 99 per cent fall in profits during the same period, to just $9m.
What’s Good for Investment Banks Isn’t Necessarily Good for Investment Bankers [WSJ]
Bank Resurrected During Financial Crisis Takes Fresh Hits From Coronavirus and Oil [WSJ]
European banks’ share of trading revenues sink to lowest in five years [FT]