If you’re looking for confirmation that 2020 has been an exceptional year for some people in the front office of major investment banks, strategy consulting firm McKinsey & Co, has just provided it. However, if you’re hoping that this excellent year will increase your chances of finding a new sales and trading job you might be disappointed.
In a report from its new CIB Insights team, McKinsey says fixed income currencies and commodities (FICC) trading revenues at ten leading banks* are up 46.3% year to date, while equities sales and trading revenues are up 12.4%.
Some product areas (eg. G10 rates) did far better than others as per the chart below. Some did terribly; U.S. muni bond trading revenues are down 42% this year.
Spurred by this revenue windfall, banks have been adding to their front office office sales and trading headcounts for the first time in four years. As the chart below shows, McKinsey calculates that headcount is up by 100 people in fixed income spread products and by another 100 people in fixed income macro products so far this year. – The first time that either have seen a rise since 2016.
Headcount*, thousands, FTE, top 10 banks
*FTE numbers include FO Sales, Trading, Structuring and exclude Research and supporting functions
Source: McKinsey & Co.
Whoopee! Except that, as the chart also shows, this year’s diminutive hiring comes after years and years of cuts.
If the addition of 2,000 people is all banks can muster in a year of soaring revenues after years of aggressive chopping, it doesn’t look good for the thousands of people let go previously. Nor does it look good for people hoping to find new jobs as volatility falls and revenues normalize in 2021.
McKinsey’s 10 leading banks in equities are: BoA, BARC, BNP, CITI, CS, GS, JPM, MS, SG, UBS
McKinsey’s 10 leading banks in FICC are: BoA, BARC, BNPP, CITI, CS, DB, GS, JPM, MS, HSBC
Sarah Butcher – Read more on efinancialcareers.com