Investment bankers have got a productivity problem
Bankers were barely half as productive in 2022 as 2021.
That might seem somewhat obvious. 2021 was a fantastic year, after all, and 2022 turned out to be a pretty bad one. But the kicker is that, despite a global pandemic and despite global lockdowns, 2022’s banking productivity was also more than 25% down on 2020.
Newly released data from market intelligence firm Coalition Greenwich highlights the issue, shown in the chart below. It explains why banking bonuses were cut last year and highlights why banks might need to make a lot more job cuts unless revenues recover soon.
The situation is clearly less extreme for people working in FICC (Fixed income, Currency, and Commodity trading) sales and trading roles. Productivity was also down on 2020, but by far less. In equities sales and trading, productivity was up.
If productivity is to improve, revenues either need to increase or headcount needs to fall. For the moment, there's little sign of either. Most banks had a terrible first quarter for investment banking revenues and cuts - so far - have been terribly modest.
Despite this, bankers are still making more on average than traders of all stripes.
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