Investment banks are cutting jobs in equities faster than any other division as revenue recovers at a slower pace than the rest of their businesses and more trading is automated.
Bloomberg reports that employees on equity desks fell by 8.5% globally in the first nine months of last year, according to a survey by Coalition Ltd., an industry analytics firm. That compares with a 6.6% drop in fixed-income workers and a 5.8% decrease for origination and advisory functions, the data show.
Banks fired workers in equities after declining trading volume reduced revenue at the same time as the growth of automated stock and options transactions squeezed margins. Trades that require human involvement cost 2.05 cents per share while those done by computer cost 1.08 cent, Tabb Group LLC said. Forty investment banks from Bank of America Corp. to Nomura Holdings Inc. announced more than 68,000 job cuts in 2012, according to data compiled by Bloomberg Industries.
'No matter what happens, the way that the business has been run will be permanently changed by this challenge', said Mike Di Iorio, head of equities at Barclays Capital for Asia Pacific said in Hong Kong Dec. 24. 'The sort of changes that are being contemplated in the cash business are changes people were contemplating 10 years ago, in terms of creating a more efficient model and introducing a more thoughtful approach'.
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