By Rochelle Toplensky 

Investment banks had an excellent first quarter. Investment bankers weren't so lucky.

Revenues at the largest U.S. and European investment banks were $44 billion, up 12% compared with the same period last year, according to a new report from data provider Coalition. Jobs in the front office, however, fell by 6% to 49,000 over the year. The figures cover Bank of America, Barclays, BNP Paribas, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, Société Générale and UBS.

Traders capitalized on plunging stocks, wild swings in commodity prices and the dramatic actions of the U.S. Federal Reserve and other central banks to ease liquidity at the onset of the coronavirus crisis. Capital markets were buoyed by the corporate dash for cash as companies built war chests to weather the economic turmoil. Bankers also helped investors adjust their holdings to the dramatic shift in the economic outlook after the lockdown restrictions spread beyond China.

But the extra profits couldn't stop the number of jobs for front-office investment bankers from shrinking. These roles have been disappearing for the past six years, and the trend is expected to continue. European lenders have long been culling their investment banking operations, and many, including HSBC, Deutsche Bank and Royal Bank of Scotland, plan to cut thousands more jobs either now or when lockdowns lift.

There seems to be little sympathy for bankers in Europe, where they have failed to rehabilitate their reputation after being blamed for the 2008 crisis. Bankers' pay and bonuses are once again under pressure in the region as governments look to them for support in helping businesses through the lockdowns.

Investment banks have invested billions in technology to replace old systems and automate processes, making bankers redundant. Neither that spending, nor the layoffs, show signs of slacking. Many staff are working from home and that also has senior managers considering new ways to trim costs.

With so many unknowns about the path to economic recovery, more volatility and more opportunities for investment bankers to profit are likely. But they shouldn't count on a jobs bonanza.

Write to Rochelle Toplensky at rochelle.toplensky@wsj.com

 

(END) Dow Jones Newswires

May 13, 2020 10:58 ET (14:58 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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