Global banks continue to feel the pinch from slowed trading with Citi joining its peers to lighten their trading operations with hundreds of related jobs expected to be axed in 2019.
The American lender is expected to slash jobs according to multiple media reports. A «Bloomberg» report (paywall) noted that the job cuts will occur over the course of the year and will be focused on its fixed income and equity trading business, including 100 jobs in the latter—nearly 10 percent of the whole division.
Excluding a one-off sales of a stake in a trading venture, combined revenue from fixed income and equity trading fell 5 percent at Citigroup in the second quarter.
Trading Drop Hits All
A drop in trading revenue has affected the banking sector as a whole, especially American banks which have heavy reliance on the business. The five largest American Wall Street banks reported an 8 percent decrease in trading revenues in the second quarter after a 14 percent decrease in Q1.
In addition to weaker sentiments and market uncertainty, numerous longer-term structural drivers have been in play to pressure bank’s trading businesses. Hedge funds, traditionally the major revenue source for bank trading, has failed to recover from its heydays and faces outflows due to competitive low-cost funds. Online trading has not only taken significant market share from banks but continues to pressure margins.
Citi joins Deutsche Bank as the latest heavyweight to headline job cuts in trading. Earlier this month, the German lender announced plans to exit equity trading and cut 18,000 jobs globally.
