For many professional traders, a career within one of London’s major financial institutions, most of whom are responsible for vast proportions of worldwide FX order flow, is considered a golden ticket to success.
Despite London’s longstanding status as the world’s number one financial center, a recent report by specialist recruiter efinancialcareers indicates that not all institutional trading desks are equal, not only from a corporate performance perspective, but also from the point of view of traders which they employ.
Barclays, one of five of the world’s largest FX dealers, operates a sales team within which the majority is based in London, consisting of front office FX sales and trading professionals which number well in excess of 100 according to headhunters. Euromoney states that Barclays’ FX business ranks third globally, with a 10.24% of all global FX trading last year.
Despite this, traders at Barclays FX have not found their role to be plain sailing, especially as efinancialcareers notes that the institution’s corporate results paled into insignificance compared to HSBC and RBS, both of which are notorious for providing their traders with much lower remuneration packages than Barclays.
First Quarter Results of HSBC Investment Bank
HSBC released its first quarter 2014 results yesterday, which demonstrate a 7.8% reduction in year-on-year FX revenues in the first quarter. RBS’s first quarter results, released last week, showed an even more modest reduction in FX revenues of just 4.5% over the same period.
Barclays’ FX business, by comparison, has not performed so well over recent months, a dynamic to which many banks are responding by consolidating their precious metals desks with their FX desks, citing similar market structures and potential efficiency as palatable rationale.
As major banks continue their path of consolidating trading desks, Barclays has largely offloaded most of its international commodities interests. The bank’s trading revenues fell a massive 48% year-on-year in the first quarter. Much of that reduction was likely due to weakness in FX sales and trading.
According to efinancialcareers, Barclays’ FX professionals are unlikely to seek pastures new at rival banks HSBC and RBS, despite the superior performances of both banks. Banking analysts opine that the good FX results at these other two British banks are not necessarily indicative either of interesting jobs or a wonderful quarter.
HSBC’s solid FX revenues are due to flow generated by its trade finance and commercial banking businesses, points out Barua at Bernstein Research. “HSBC is not the place to work in FX if you’re in the business if taking risk,” he points out.
Similarly, Mr. Barua says RBS’s exemplary FX results are mostly due to its poor performance and write downs in the first quarter of 2013. This year’s results are flattered by the poor comparator, however it is possible that Barclays may employ less FX professionals in future.
Just one week ago, Mr. Barua considered that Barclays may remove 30% of the employees within its entire investment banking division, amounting to between 6,500 to 7,500 jobs.