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Fierce Competition and Shrinking Revenue Pool to see more Investment Banking Down Sizing

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Job Cuts in the Esteemed Investment Banks

The retrenchment in the Investment Banking Business seems to be never ending with a DB report predicting further job losses in the sector. Despite making a massive $240 billion in revenues last year, the industry has to shed more positions in order to become sustainably profitable. There is just too much staff in the industry which makes it difficult for the industry to make returns in excess of the cost of equity which is 12%. The biggest overstaffing is in the following 3 sectors of:

a) Equities

b) Advisory

c) Back Office

Fierce competition in the industry is set to continue over the next 2 years as the revenue pool is set to shrink further.

Note 2012 has not been pretty with already thousands of investment banking job cuts.

Jobs in Investment banks are being ruthlessly cut since the beginning of 2012, as the revenues and profits of these banks disappear. Increased regulation and the economic crisis has led to decreased leverage and profits for these banks. While the first round of cuts was mainly by the European Banks faced with a huge domestic crisis, tens of thousands of Financial Jobs are being slashed by European and USA Financial Institutions.

 The Financial Industry has become too huge as a percentage of the global economy with any value creation to say something like the IT industry. The share of  the market cap of the stock market had become too high during the boom years of 2008 and it is continuing to go down. Despite the best (some would say the worst) efforts by the Governments to prop up the Too Big to Fail Banks, jobs are being let go as there is not enough work. European Banks are shrinking their balance sheets as they are too leveraged and insolvent. Without the ECB crutch, almost all of them would go under.

London and French Banks are selling divisions and shedding jobs to become more leaner and survive till the Government keeps them on life support. Major financial centers of London, New York are the worst hit in terms of financial job losses.


Investment banks, set to book $240 billion revenue this year, still need to cut jobs and costs to make the industry profitable, Deutsche Bank said.

Few will deliver returns above their cost of equity, which averages about 12 percent, with back-office functions and equities and advisory units most ripe for the knife, analysts at one of the world’s biggest investment banks said.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

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