The summer of 2022 in investment banking might not be quite as fun as the summer of 2021. Not only are debt capital markets (DCM) bankers working all summer when issuance windows briefly open, but the nebulous threat of job cuts could suddenly become much more tangible.
Headhunters and banking insiders have been murmuring about job cuts for some time, but as the summer season begins, the talk is getting louder. Writing last week, headhunter David McCormack of New York-based search firm DMC Partners, spied on by CNBC, predicted that a “streetwide RIF [reduction in force] coming in July.” Banks’ second-quarter earnings will be “ugly,” McCormack added: “Banks have a serious revenue problem and will be forced to break even in the second half of the year.” They could see 2022 bonuses now forget as well.
Who saves costs? McCormack doesn’t elaborate, but CNBC notes that various large US banks have increased headcount and that their earnings may no longer justify it: hEAdcount at the investment bank of JPMorgan, Goldman Sachs and Morgan Stanley have increased by 13%, 17% and 26% respectively over the past two years (partially due to acquisitions at Morgan Stanley). Equally, however, CNBC says it’s being spoken to by people at JPMorgan, Goldman and Morgan Stanley and that there are no immediate plans for major layoffs, although underperformers could be fired normally later in the year.
Some cuts are already being made elsewhere. As we reported yesterday, Bank of America’s EMEA sales director has been fired. So did a handful of people at Deutsche Bank in Hong Kong and in New York. Rate traders are gone from Mizuho (though rates are rarely strong territory). Credit Suisse has to bear high technology costs.
With cuts on the horizon, McCormack joins the chorus of voices suggesting now may not be the time to linger in the home office. “The banks have very clearly tried to get people back to work,” he told CNBC. “If you’re not excelling and continue to work from home, you’re definitely at greatest risk…”
Separately, Coinbase is the crypto exchange that has already cut 1,000 employees, including various senior technologists hired by banks and hedge funds.
Writing yesterday, analyst at Goldman Sachs William Nance downgraded the stock, hinting that Coinbase’s troubles are just beginning. “We believe Coinbase will need to significantly lower its cost base to contain the resulting cash burn as retail activity slows.” Ominously for Coinbase staff, Nance added: “Coinbase faces a difficult choice between diluting shareholders and significantly cutting effective employee compensation, which could impact talent retention.” Shares of the company, which had already fallen 75% this year, fell to Nances notification by a further 11%.
In the meantime…
Bluecrest hired Chris Wheeler from Citadel ahead of an expansion in Dubai that may see 10 hires, including at least three portfolio managers. (Blumberg)
Citi discontinued Patrick Frowein as Vice Chairman of Banking, Capital Markets and Advisory in the EMEA region. Frowein was last Chairman of Investment Banking Coverage and Advisory at Deutsche Bank. (Blumberg)
Citigroup has appointed Alexander Stiris to head its commercial bank as it prepares to hire 900 people. Stiris was Co-Head of Capital Markets and Advisory for Citi in the Nordic region. (financial news)
UBS President Colm Kelleher and CEO Ralph Hamers tour major US shareholders to persuade them to invest in the bank. Capital Group, T Rowe Price, Wellington and Fidelity are among their targets. (financial times)
Crypto hedge fund Three Arrows has defaulted on a $675 million loan. (WSJ)
Before the crypto meltdown, people were doing 25,000% return on yield farming and staking. (Blumberg)
The Winkelvoss twins don’t seem to care much about Gemini, their own crypto exchange anymore. Instead, they care more about Mars Junction, her rock band. “They laid off 10 percent of their staff and then went on tour with their rock band.” (Daily Beast)
A former Citadel Securities quant trader is now the CEO of what’s becoming Shopify for independent doctors (Business Insider)
graduates of Bayes Business School, formerly Cass, earned the highest average salary of any university in the country five years after graduating: £52,000. Others at the top of the rankings included Imperial College, University College London and the Universities of Oxford and Cambridge. (The times)
The use of private jets by companies is at a high level. No bank is among the top 10 private jet users. (financial times)
A pilot’s advice on jet lag. “When I arrive as a pilot in a city I know, I stick to my 10 o’clock rule: If I can put my head down on a pillow by then, I sleep for three hours, then wake up and have a late breakfast. If I get to my room after 10am, I’ll hold out until the early hours. And when I’m a leisure traveler and I’m excited to be in a whole new place, I go exploring no matter how tired I feel.” (Financial Times)
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