Turbulence hits banks' trading desks weeks after bonuses were paid

If you've happily banked your bonus for 2025, then congratulations. If you work for Nomura or Macquarie and are still waiting to be paid, then consolations. Much has changed in the past week.

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Banks began this year raving about the possibilities for M&A deals in what was expected to be a "top decile" opportunity set; M&A bankers appear to have been paid bonuses accordingly, with an eye to retention for the year ahead. Similarly, trading revenues were expected to be flat this year compared to last, and in areas like macro trading we understand that double digit bonus increases were recently forthcoming.

Just a few weeks later, banks may be wondering why they bothered. 

Uncertainty created by war in the Middle East and rising oil prices is in danger of delaying M&A deals, which Bloomberg notes were already spooked by falling software stocks in February. Due diligence is taking longer, but it's hard to be definitive when oil prices could either fall or go through the roof. At the same time, macro hedge funds and commodities pods are thought to be nursing large losses, making it less likely that they'll poach banks' traders - who were paid to stay in place. And some of banks' own trading desks are understood to have made losses of their own.

Losses are thought to have afflicted businesses like UBS's SSA and covered bond trading desk, which was said to have been a driver of profits last year and to have been paid only recently commensurate with this. UBS declined to comment, as did the desk itself.

Speaking today at the RBC Global Financials conference, Citi CEO Jane Fraser said global economic growth will not be heavily impacted if oil remains above $100 for only four to six weeks. Large cap M&A is "not missing a beat" yet, said Fraser; there's more hesitation about mid-market M&A deals and smaller IPOs. 

Equities and fixed income trading businesses are up by the mid-teens year-on-year but "obviously, that can change in 2.5 weeks," Fraser added. However, speaking at the same conference, Bank of America said its trading business had benefitted from the volatility and should register a low double digit percentage increase in the first quarter. 

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