A reminder that October is a dangerous month to be a banker

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Hold tight. This time next week, it will be October, and October has historically been a dangerous time to work in banking. This year, it may be more dangerous than ever. 

As we noted yesterday, the finance recruitment market is in a particularly tight spot this year. Combined revenues across across all major divisions - fixed income currencies and commodities (FICC), equities, and investment banking divisions (IBD), were at their lowest level since 2006 in the first half of the year and the prognosis for the third quarter is not great. Banks need to cut costs and as research firm Tricumen has pointed out, some need to do so more urgently than others (look at the red dots, by business, in the centre of their spider charts for an indication of the danger zones.)

October is the month when the next round of cuts are likely to happen. In 2019, it may seem that there have been ongoing cuts throughout the year after Nomura's strategy change in April, Deutsche's pivot in July, and HSBC's cuts in May and then again in August. Traditionally, however, October is one of three times during the year when banking layoffs spike (as reflected by searches on Google Trends), the others being December and June.

The October pinch point was visible in 2018. Last October there reports of redundancies at Bank of America, JPMorgan, Standard CharteredWells Fargo and Lloyds among others. 

A managing director who recently left one U.S. investment bank says the annual culls are known as internally by the acronym RIF - reductions in force. "Most banks have one or two RIF windows (except JPMorgan who trim throughout the year)," he says. "We had one in October and another in February/March. Double digit reductions in revenues mean that October cuts are likely coming."

If so, anyone out of the market already needs to redouble their efforts to find a new job. "You need to start looking now with a view to signing a contract in December or early in the new year," says one London equities headhunter. "There's no one really hiring at the moment."

Photo by Cindy Tang on Unsplash

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