With reports flying fast and furious that a number of financial institutions have plans to trim jobs this year, particularly in securitization, a handful of market players told SI they are at the edge of their seats in anticipation of the shakeout. But the real question is: Do we chalk it all up to the housecleaning you tend to see at the beginning of every year, or are we looking at something more entrenched—a directional change?
“It’s certainly a valid question,” one securities investor told SI in an interview. “I wouldn’t be surprised if this marks a real de-emphasis on securitization issuance for some of the banks because it is a declining sector. I know a lot of people on the street moving from buyside to sellside and a number of houses planning to chop jobs.”
Still, another investor emphasized that it’s not just securitization getting the ax in the most recent wave of cuts. “A lot of the big banks are just re-evaluating their business models, especially with some of the regulatory changes hitting home a little harder now,” the investor said, referring to the Volcker Rule, and other Dodd-Frank regs, said to be inching toward resolution in the first part of 2012. “I think that’s where a lot of this is coming from, in particular after a lot of firms took it on the chin with all the volatility last year.”
Among the staffing changes on the collective ABS sector’s radar was an announcement last week of “strategic and organizational changes” to the Royal Bank of Scotland’s investment banking and wholesale business. “We remain committed to our leading fixed income, securitization, risk management, foreign exchange and rates businesses, however we intend to make more efficient use of our capital and reduce our reliance on unsecured wholesale funding,” a spokeswoman at the bank said in a statement. The plan was just one item on a much longer list of restructuring initiatives for RBS, and sources say the bank is in good company.
As ever, stay tuned.