Banks Keep Cutting Bond Traders as One-Third Gone Since 2011

  • FICC headcount fell another 5 percent from year ago: Coalition
  • First-quarter revenue was lowest since financial crisis

The world’s biggest banks have shed about one in three bond traders since 2011 as rules making some businesses less profitable dovetail with volatile markets that are spooking investors, according to research from Coalition Development Ltd.

The total count of fixed-income, currency and commodity traders and salespeople at global banks was 18,300 in the first quarter of 2016, 32 percent less than the same period five years ago, Coalition data shows. Headcount fell 5 percent from a year earlier as lenders including Credit Suisse Group AG, Morgan Stanley, Deutsche Bank AG and Goldman Sachs Group Inc. fired workers in so-called FICC businesses to cut costs.

Morgan Stanley

Regulators seeking to avoid another financial crisis have limited banks’ leverage when trading fixed-income products, making those businesses less profitable and prompting lenders to scale back operations. The new rules have coincided with a slump in commodity prices and a slowdown in the Chinese economy that helped bring about what Coalition described as the the weakest start to the year for the industry since the financial crisis.

“Revenues fell significantly, driven by a weak trading environment in the first two months of the quarter and a lack of one-off events” as seen in the year-earlier period, Coalition wrote in a report on the data.

By comparison to their bond-trading counterparts, equity traders have fared better. Their numbers slid 12 percent since 2011 to 18,800 and fell 1 percent from the first quarter of last year, the data show. The number of bankers advising clients on mergers, acquisitions and underwriting deals fell 14 percent over the five years and dipped 1 percent from 2016 to 17,700, Coalition said.

FICC revenue for the first quarter tumbled 28 percent from the same period last year to $17.8 billion, according to Coalition data. That’s down almost half from what the lenders produced from the same businesses five years ago, the data shows.

Within FICC, revenue from trading credit products fell 39 percent in the period to $2.9 billion because of “exceptional weakness” in distressed bonds and collateralized loan obligations, or CLOs. Securitized products revenue tumbled 42 percent, while commodities dropped 40 percent, the data shows. Interest-rates trading, the business that includes buying and selling government bonds, had the smallest decline, falling 8 percent to $6.2 billion.

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