The number of fee-earners at the world’s biggest investment banks has shrunk by one-quarter since 2010, but the cuts have not affected every business. Some have proven untouchable by restructuring, while others have continued hiring. Danielle Myles examines the data.

As the biggest investment banks (IBs) approach the final stretch of their post-crisis restructuring, the cuts to front-office staff numbers have finally started to plateau. Research from data analyst Coalition reveals that the world’s 12 biggest IBs have reduced their number of fee-earners by one-quarter over the past seven years, down from 70,098 to 52,234.

Yet in 2017 just 745 front-office roles disappeared, a reduction of 1.4% compared with the annual falls of about 10% seen at the start of the decade.

New equities darlings

Among IBs’ three major divisions, equities has fared the best since Coalition started tracking the data in 2010. Cash equities, equity derivatives, prime services and futures and options (F&O) saw their staff levels drop 16.5%, but the pain has not been shared evenly. As one of the original asset classes to move to electronic trading, cash equities has been hit by automation. It lost nearly 3000 jobs – or 25% of its staff – over the period. Nonetheless it is still the second biggest IB business by headcount, trailing only mergers and acquisitions (M&A) advisory and coverage.  

At the other end of the spectrum is F&O, where the front office has grown by 10%, a reflection of the fact that more instruments are now traded on-exchange. Prime services headcount has also been steady since 2010, buoyed by five years of income growth. “It has become the biggest equities business by revenue, which reveals how important the hedge fund client base has become,” says Amrit Shahani, a research director at Coalition. “Banks have responded by increasing headcount. Plus, some US banks have strong global ambitions in this area, so they have been growing.”

Origination and advisory, encompassing M&A and primary capital markets, has declined 18% since 2010. In line with the industry move to a capital-light, advisory-led style of investment banking, M&A has fared better than other businesses. But its relatively stable staff levels mask changes in the make-up of its ranks. “From 2013 to 2016 there was a lot of juniorisation, with banks cutting senior relationship bankers. But those that did this saw a decline in revenues, and so over the past 18 months we’ve seen a reversal of that trend,” says Mr Shahani. “Headcount has remained the same, but there has been a lot of senior hires across M&A and advisory.”

Rebuilding FICC

Fixed income, currencies and commodities (FICC) has borne the brunt of post-crisis reforms and IB restructuring, as proven by its pool of front-office staff, which is 38% smaller than in 2010. Regulatory pressures have forced IBs to wind down parts of their credit and securitisation businesses, and all but exit commodities (where headcount has fallen to less than half in the past seven years). Emerging markets rates and foreign exchange is down 44% due to IBs closing offices in Latin America and Asia.    

But a reversal may be on the horizon. Many IBs have started to recommit to this area, as revealed by the number of credit fee-earners growing by 10% over the past three years. “[FICC] headcount remained flat in 2016 and 2017, despite a 10% drop in revenues, as banks have started to rebuild and come back into the fixed-income business,” says Mr Shahani. “I think the decent client flows and volatility seen in the first quarter of this year have given them some faith that those decisions they made 18 months ago were the right ones.”

Headcount 0418

All data sourced from Coalition.

PLEASE ENTER YOUR DETAILS TO WATCH THIS VIDEO

All fields are mandatory

The Banker is a service from the Financial Times. The Financial Times Ltd takes your privacy seriously.

Choose how you want us to contact you.

Invites and Offers from The Banker

Receive exclusive personalised event invitations, carefully curated offers and promotions from The Banker



For more information about how we use your data, please refer to our privacy and cookie policies.

Terms and conditions

Join our community

The Banker on Twitter