Investment banks cut jobs despite coronavirus trading surge - Coalition

LONDON (Reuters) - Investments banks cut jobs at the fastest pace in six years during a first quarter in 2020 even though the coronavirus pandemic triggered a surge in volatility and boosted revenues to a five-year high, data published on Wednesday by research firm Coalition showed.

FILE PHOTO: St Pauls cathedral and the City of London financial district are seen at dawn as the spread of coronavirus disease (COVID-19) continues in London, Britain, April 19 2020. REUTERS/John Sibley

While investment banks have benefited from the short-term increase in trading, they are expected to be hit hard by a global recession triggered by the COVID-19 crisis and have already imposed hiring freezes.

In Britain for instance, the number of finance professionals seeking new jobs rose by more than 40% in the first quarter compared with the last three months of 2019.

Coalition’s data showed that the banks’ revenues from fixed income, currencies, and commodities had their strongest first quarter since 2015, surging 20% to 22.7 billion dollars (18.5 billion pounds), as the financial turmoil from the coronavirus crisis prompted a spike in trading.

Investment banking divisions, which raise debt and capital for their clients, generated a 7% increase in revenues, while revenues from operations involving equity products rose by 3%, the data from Coalition, which tracks 12 of the largest global investment banks, said.

But despite the surge in activity, banks continued with ongoing efforts to cut costs and reduced headcount by an average of 5%.

Equities divisions bore the brunt of the cuts during the quarter with a 10% fall in full-time front office employees.

Investment banks’ cash equities businesses - servicing investors who buy and sell shares - has been struggling for years with falling trade volumes, margin pressures and costly regulations.

The exit last year of Macquarie Group MQG.AX from European and U.S. equity trading illustrated these pressures.

Below is Coalition’s table showing an overall reduction of 5% in headcount for the 12 global investment banks it covers:

Reporting by Julien Ponthus. Editing by Jane Merriman