Analysts at Deutsche Bank don't think 2013 will be a particularly good year for jobs in investment banking. In a note released earlier this week they predicted that revenues will be either flat or down on 2012 and that there will be another 6-7% reduction in headcount across global investment banks. Fixed income currencies and commodities (FICC) businesses are likely to be in for a difficult time, especially rates businesses - where Deutsche forecasts that revenues will fall 40-50% versus 2012. However, it's not all bad: there will be some hiring, somewhere. These are the areas that Deutsche Bank analysts think are looking up.
1. Back office and regulatory roles
Deutsche Bank doesn't necessarily think there will be actual hiring here, but it does think there will be less in the way of redundancies. "Beyond H1 2013, we think investment spend for MiFID2 / Dodd-Frank / EMIR and back office complexities will slow the pace of cost cutting," write analysts at the bank.
2. Cash equities sales and trading
After a challenging few years in the cash equities world, 2013 could be the year in which things start to improve. Deutsche is predicting a better year for cash equities as volumes recover. The cash equities business is being afflicted by structural changes as electronic trading squeezes margins, says Deutsche. This will continue in 2013, but 2012 volumes were "unusually low", suggesting room for improvement. Cash equity revenues are closely correlated to the number of shares traded, Deutsche points out.
3. M&A advisory and equities underwriting
This is where Deutsche Bank is predicting the biggest revenue improvement this year. A stronger global economy should drive higher M&A volumes, it predicts, with revenues increasing by 10-15%. Deutsche's analysts are most bullish on equity capital markets (ECM), however, where they think revenues will increase a massive 42% in 2013. "This seems like a large increase but it is only to the average level of the preceding five years," they say.
Unfortunately, Deutsche is far less optimistic about debt capital markets (DCM) revenues in 2013. DCM had a good year in 2012, and in 2013 Deutsche predicts revenues will be either flat or slightly down.
Here's the all-important graph with revenue forecasts by business area: