REUTERS: Market trading is booming at U.S. and European banks thanks to Donald Trump and Brexit, and yet the glory days of dealing rooms the size of football pitches remain as distant as ever.
Scarred by the 2007-09 global financial crisis and a subsequent regulatory clampdown, cost-conscious banks aren’t taking on more traders, uncertain whether the revival will last.
“There’s no hiring spree,” Jason Kennedy, chief executive of recruitment firm Kennedy Group in London, told Reuters. “Management don’t know if the boom is real or not, if we’re in a bubble or not. The last thing they are doing is gear up, only to find there’s nothing behind it.”
Last year’s shocks of the British vote to leave the European Union and Trump’s U.S. presidential election victory fuelled a surge in market volatility and banks’ trading activity, revenue and profit.
But that won’t mean more traders, with banks avoiding any return to dealing rooms staffed by hundreds like before the crisis, instead investing more in automated trading.
Europe’s largest bank HSBC began cutting around 100 senior jobs last month in its investment banking division worldwide, according to sources with direct knowledge of the matter, without saying how many were traders.
Germany’s largest lender, the troubled Deutsche Bank, is set to scrap roughly one in five equity trading jobs under a scheme to cut costs across the globe, according to sources, and will slash pay and bonuses.
Even Wall Street’s big beasts, which have profited most from the boom, are cautious about how long it will continue, with some offering existing staff juicier bonuses to prevent departures of talent rather than expanding the payroll.
“We’d always rather do more with less,” said one senior source at a major Wall Street trading firm.
“We are not looking to ramp up hiring. New technology will help,” the source told Reuters. “We are always looking at productivity gains. Sometime saying you’re hiring a bunch of people is a sign of great stupidity.”
The biggest trading gains have been in fixed income, currency and commodities (FICC). The top five U.S. banks made US$10.5 billion in revenue from FICC trading in the fourth quarter, and US$14.1 billion in the previous three month period.
The US$24.6 billion total for the second half of last year was up 37 percent from US$17.9 billion from the same period in 2015.
Only four of Europe’s biggest banks - Credit Suisse, Deutsche Bank and France’s Societe Generale and BNP Paribas - have reported their fourth quarter earnings so far. They too said FICC trading revenue had increased, although not as strongly as at their Wall Street rivals, and their equity trading performance has been patchier.