FICC cuts set to continue

Despite an uptick in third quarter revenues within the fixed income businesses at the largest global banks, downsizing within the units is poised to continue over the next two years, according to new research.

Front office headcount within fixed income, currencies and commodities businesses at the 10 largest banks has fallen sharply in recent years, down 25% or about 5,900 roles over the last three years, according to consultancy Coalition.
Front office FICC staff at the banks was down 10% year-on-year to 17,600 at the end of the third quarter.

But those cuts have even further to run, according to the UK consultancy. FICC headcount could decline a further 10% in the next 12 to 24 months, according to research manager Eric Li. He said: “We think fixed income is the most vulnerable area.”

Fund fees droop at Allianz

German insurer Allianz’s asset management business suffered a two-thirds drop in performance fee income to €126 million in the nine months to September, including a 4.8% drop in the third quarter.

Performance fee income was down significantly from 2012, as well as 2013. Allianz generated €396 million from performance fees in the first nine months of 2013 and €383 million in the corresponding period of 2012. In the nine months to September 2011, its performance fee income was just €182 million.

Total fee income at Allianz's fund division fell 11% to €5.82 billion and expenses were cut by 3% to €1.08 billion. Performance fees only contributed to part of the decline, but their receipt is viewed as an important test of asset manager virility.

Career Clinic: Bonus clauses to look out for before resigning

As your boss reflects on your input for the year, are you getting itchy feet and thinking of resigning? If you do wish to be considered for a bonus and receive any award, you may want to hold off on quitting your job.

Many contracts of employment and company bonus rules state you will only be eligible for a bonus if you are in employment on bonus payment date. Often eligibility is also subject to you or your employer not having given notice before the payment date. In these circumstances, should the bonus be worth waiting for, perhaps, do not resign until the cash hits your account.

Many bonuses are discretionary. Common wording may be that payment of a bonus in one year does not guarantee payment in subsequent years, bonuses may be dependent on a number of factors and the bonus rules may change from time to time. It is important to know though that even where your employer has discretion, that discretion must not be exercised arbitrarily, capriciously or unreasonably. While it is not a very high threshold for the employer to pass, in some instances, the courts have held that discretion has not been exercised properly.

Career Clinic: Caught out lying about your salary

I lied about my previous salary to get a better deal with my new employer. Could there be repercussions if they find out?

The simple answer is “yes”. It would probably be construed that you deliberately misled at interview and that there are significant trust and integrity issues.

There is a big difference between being vague about your pay package – many people talk about their total compensation and try to lump together salary, bonus, pension contribution and any other benefits that they get – and deliberately lying about your salary level. Bear in mind that when you join the firm you will have to bring your P45 tax document with you – which details your pay – so they will find out your real pay eventually.

Swiss bank’s deputy CEO resigns

A Swiss bank said Friday one of its top executives has resigned amid a German tax-fraud investigation that is recently expanded across national borders.

Bank J. Safra Sarasin AG said deputy chief executive Eric Sarasin has resigned, in a bid to ensure that accusations raised as part of the investigation “do not tarnish the image and reputation of the bank.” Officials are looking into Sarasin’s and the bank’s role in providing investments that allegedly enabled clients to fraudulently earn tax rebates.

The investments at the heart of the ongoing German probe involve what are known as “cum/ex” stock trades, which can be used to claim tax credits based on transactions timed around dividend payouts.

Citigroup hires from Morgan Stanley for oil and gas role

Citigroup is adding a managing director to its European oil and gas team, despite the regional fee pool in the sector being down 20% on a year earlier.

Shreyas Bordia, previously an executive director at Morgan Stanley, is in the process of joining Citi, according to people familiar with the matter. The oil and gas team at Citi is run by Stephen Trauber, head of global energy investment banking at the bank in Houston. Citi and Morgan Stanley declined to comment.

Bordia’s move comes as the oil and gas mergers and acquisitions market, long known for its mega deals, is surviving on pockets of activity.

Inflexible views on flexible pay

In just 36 hours last week, a crack widened into a chasm between two key regulators on the issue of bankers’ pay. Closing that gap is going to take a very long time.

The public brawl between the European Banking Authority and the Bank of England’s Prudential Regulation Authority has happened because of a fundamental difference of philosophy, which, in turn, stems from a different definition of what problem needs solving.

The issue is, of course, allowances – the mechanism that banks have used to circumvent – yes, let’s be honest about it – the new European cap on bonuses. The European Banking Authority ruled last week that the vast majority of the payouts, which were supposed to sit somewhere between variable and fixed pay, should be considered as the former rather than the latter and were, therefore, not in line with Capital Requirements Directive, the document that contains the bonus rules.