Job cuts, lean bonuses loom over Europe's bankers in 2024

A mix of global economic unease and geopolitical uncertainty means optimism is in short supply among bankers from the City of London to Frankfurt's 'Mainhattan' financial district.

Even rainmakers renowned for seemingly conjuring deals from nowhere are struggling to see ways to work their magic and drag investment banking revenues out of the doldrums.

Finance executives, consultants and headhunters interviewed by Reuters predict subdued deal flows, modest bonuses for most and heavy job cuts in 2024.

"2023 will ultimately be one of the lowest corporate finance fee pools in modern history," said Fabrizio Campelli, head of Corporate Bank and Investment Bank at Deutsche Bank.

The $2,669 billion of deals struck so far this year globally is the lowest since 2005, Dealogic data shows, while in the Europe, Middle East and Africa region, the $616 billion of deals which have been completed is the lowest since 2004.

It is not only corporate dealmaking that is on the back foot. Banks are wary profits will come under pressure from tighter regulation, including tougher capital requirements dubbed the 'Basel Endgame' which are set to be rolled out by global regulators from 2025.

And while consumer lending has boomed on the back of central bank policy moves, margins are now in retreat as interest rates peak and competition for deposits intensifies.

"Overall, the outlook for the next few years for banks is flat revenue," said Ronan O'Kelly, partner and head of corporate and institutional banking for Europe at consultant Oliver Wyman.

Banks have already turned to cost cuts to try to weather the downturn, which in a people-intensive business means job losses.
Global growth is set to fall from 2.9% this year to 2.7% in 2024 before picking up in 2025, the Organisation for Economic Cooperation and Development said on Wednesday.