By Paul Clarke
Of Financial News
The world's largest investment banks cut 700 frontline jobs last year, even as revenues in the industry surged to a 10-year high on the back of a Covid-19 fuelled trading bonanza.
Equities trading units were again at the sharp end of job cuts last year, according to research provider Coalition, as European banks pushed ahead with strategic cuts despite the boost from the coronavirus crisis.
Structured equity derivatives were the target of job cuts last year, as French banks including Societe Generale SA and Natixis posted deep losses in the first half of 2020 on the back of companies shelving dividend payments in the early days of the pandemic.
Equities is a low-margin business, and banks have continued to question the viability of their business lines. Both SocGen and Natixis cut equities jobs last year, while Deutsche Bank AG shuttered its stock trading unit as part of a broader strategic review. In 2021, HSBC Holdings PLC has also cut jobs within its European equities business.
In total, 600 jobs were lost from the top 13 investment banks' equities units last year.
Investment bank revenues were up by nearly 30% to $194.2 billion, the numbers show, the best performance in over a decade for the industry, led by a surge in fixed-income, currencies and commodities trading.
Fixed-income revenues reached $98.3 billion in 2020, driven by sharp gains in commodities and rates trading. However, after a record first half for the business unit that has been subject to deep job cuts since the financial crisis, revenues slowed in the final six months of the year, and were up by 41% for 2020.
While bank executives have played down a repeat of 2020 for their trading divisions this year, some have said that 2021 has got off to a flying start. JPMorgan chief financial officer, Jennifer Piepszak, told a conference in February that its markets business has had a "very strong start" and was up "meaningfully." Morgan Stanley CFO Jonathan Pruzan, speaking at the same conference, said that "the first six weeks of the year feel more like 2020 than they do 2019".
Year on year, commodities units of investment banks were the star performers in 2020, with revenues surging by 98%. Rates trading units increased by 87%, according to Coalition, which didn't give revenue numbers for the two divisions.
Traditional investment banking units were spared from any cuts in 2020, with a reduction in M&A bankers offset by recruitment within equity capital markets, Coalition said. Revenues in the division were $49.4 billion, a 29% increase on 2019.
(END) Dow Jones Newswires
March 05, 2021 03:56 ET (08:56 GMT)Copyright (c) 2021 Dow Jones & Company, Inc.