If you work in fixed income sales and trading at JPMorgan, you should be safe. If you work in fixed income sales and trading at Citigroup, you may not be. JPMorgan's fixed income sales and trading revenues fell by only 8%; Citigroup's fell by 26%. With the possible exception of Goldman Sachs - which reports tomorrow - other banks are expected to be more like Citi than JPM.
Predictably, now that the dire results are out in the open there are murmurings about layoffs. John Gerspach, Citi's CFO, said yesterday that the bank doesn't plan any big cost-cutting announcements in the near term, but analysts predict that something will have to give if revenues don't pick up soon. Fred Cannon, analyst at Keefe, Bruyette & Woods Inc, told Reuters it will take six months of poor revenues before banks are forced to trim staff. As we've noted often, fixed income is a high margin business and when it's sick, profitability plummets. Citi's return on equity was just 6.4% in the third quarter and its profit margin was a slender 21%. Citi's fixed income bankers need to hope this quarter is kind.
Separately, the Financial Times reports that Hector Sants - who yesterday took a leave of absence from his job as head of compliance at Barclays after being diagnosed with exhaustion - had argued with senior Barclays bankers. Hants had a 'fractious relationship' with some senior Barclays executives, the FT said. Who could those executives be? Hants was brought in by Antony Jenkins, the implacable new Barclays CEO, to help transform Barclays' culture. However, even after the departure of Rich Ricci in April, Barclays remains filled with Bob Diamond's men and ex-Lehman bankers. Maybe the combination was simply too much for Sants?
A mid-level Wall Street trader might earn $500k. Before the crisis, total compensation might have been closer to $800k. (Reuters)
Barclays is handing its new finance director, Tushar Morzaria, shares worth £3.2m to buy him out of bonus schemes. (Guardian)
Deutsche Bank ruling could open the door to billions in Libor claims. (Reuters)
Jamie Dimon hates people who throw colleagues under buses. (MarketWatch)
Goldman women complain that the bank gives its managers, most of whom are men, “unchecked discretion” over assigning responsibilities to their subordinates and that women lose out as a result. (Bloomberg)
JPMorgan asset management is eschewing sellside research and building a larger inhouse team of researchers for its emerging markets business. (Financial News)
US banks complain about the soft treatment of Chinese banks in the UK. (Financial Times)
Neil Woodward, fund manager at Invesco Perpetual who generated 2,200% returns since 1998, has decided to break free and go it alone. (The Times)
How to screw up your marriage on purpose. (James Altucher)