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The banks that desperately need a return of investment banking

2023 investment banking revenues are already down on 2022 – but this might be more of a concern for some banks than others.

Tricumen, the market intelligence firm, has calculated the relative performance of individual banks in 2022, with further breakdowns by department – banking (which includes M&A, ECM, and DCM), fixed income, currencies, and commodities (FICC) and equities trading. It's then estimated each bank's revenue per Full-Time Employee (FTE) across these divisions.

Operating Revenue / Front Office FTE (US$) (Investment Banking)


The chart above suggests that individuals in front office investment banking division jobs at some banks are far more productive in operating revenue terms than others. Banks outside the dotted circle are comparatively more “efficient” per banker in these terms than those inside. The closer a bank is to the centre, the worse its performance. 

On this basis, Tricumen suggests that bankers at SocGen and UBS were some of the least efficient in 2022, and that HSBC and Deutsche Bank didn't do much better.

If investment banking division revenues don't recover, the implication is that bankers at these banks could be most exposed to cuts.

By comparison, Wells Fargo, JPMorgan, and Goldman Sachs are all more successful, based on revenue per person.

Operating Revenue / Front Office FTE (US$) (FICC and Equities)

In trading, the story was slightly different. Tricumen's estimates suggest that in both fixed income and equities trading, Goldman Sachs, JPMorgan, and Morgan Stanley were outperformers in terms of the efficiency of front office staff, while the likes of Credit Suisse, Wells Fargo HSBC (for equities) and SocGen (again) were not. Trading has been a crutch for many banks since investment banking revenues slumped, with Deutsche Bank especially relying on its fixed income traders to compensate for the poor performance of its bankers.

Operating revenues per head don’t tell the whole story – Tricumen estimates that BNP, for instance, has an above-average profit margin in all areas (banking, FICC trading, and equities trading) compared to peers, which may stand the French bank in good stead if banking revenues don't return in 2023. 

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AUTHORZeno Toulon

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