The tally of front office staff generating revenue on a full-time-equivalent basis in equities sales, trading and research across the 12 banks was 15,800 in 2019 — a 1,700 fall from the 17,500 employed in 2018.
Deutsche Bank was one of the banks which cut their equities staff last year, having got rid of much of its equities business, although some of its services were offloaded to BNP Paribas, another of the banks on Coalition’s list.
Macquarie was not on the list, but last year it emerged that it was shutting its US and European cash equities business.
This year has not started much better for equities professionals, with HSBC slimming down its sales and research teams as part of a strategy overhaul announced this week.
Coalition said that the equities cull was down to banks reworking their cash equities franchises.
Among the top banks, it has been the Europeans that have struggled in equities in recent years, with their US peers becoming more and more dominant.
“The concentration of equities revenues within the top banks has gone up significantly in the last two to three years and it continues to go up,” said Amrit Shahani, head of global markets research at Coalition.
Elsewhere last year, banks cut their headcounts in fixed income, currencies and commodities (FICC) by 7%, mainly in macro products; while headcount in investment banking divisions (including advisory, coverage, equity capital markets and debt capital markets) was stable. However, Coalition said there had been a slight reduction in ECM.
Meanwhile, the 12 investment banks made a return on equity of 6.7% in 2019, versus 8.1% the year before.
“Banks are drifting further away from meeting their cost of capital, which typically ranges between 10%-12%,” said Coalition.
It appeared that the 2019 return on equity was 80bp lower than it would have been otherwise simply from Deutsche’s Capital Release Unit, where the bank has placed unwanted equities trading assets and legacy fixed income positions. "Non-core assets were a drag on returns following the creation of a new non-core division by one of the EU banks," said Coalition.
But the simple fact of lower revenue across the banks when excluding non-core activities accounted for 70bp of the drop in return on equity versus 2018.
Alongside BNP Paribas and Deutsche, the other banks in the 12 were Bank of America, Barclays, Citi, Credit Suisse, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, Société Générale and UBS.