* 2012 investment banking revenue seen sliding 15 percent
* Average return on equity seen at 5 percent this year
* Larger firms urged to expand in emerging markets
* Smaller banks must focus on niche sectors, products
ZURICH, Sept 19 Up to 15 percent of the 500,000
jobs in investment banking could disappear in the next five
years as the euro zone crisis and stiffer regulation hammers
revenue, profitability and risk-taking, Roland Berger Strategy
Consultants said on Wednesday.
A study by Roland Berger Strategy, one of the world's leading
consulting firms, suggests that investment banking global
revenue is set to fall by 15 percent this year, while average
return on equity could slide to 5 percent from 15 percent in
2010, fuelling the need to cut jobs.
The study's authors said that larger investment firms should
protect themselves by bulking up in emerging markets, while
smaller players will be forced to concentrate on niche products
or client segments.
"Investment banks should increasingly focus their long-term
growth prospects on Asia, South America and eastern Europe, but
also be prepared for the risk of short-term setbacks in these
markets," consultant Markus Boehme said.
Tumbling revenue from stock trading dragged down global
investment banks' earnings below year-ago levels in the first
six months of 2012, underlining the threat of heavy job cuts in
A big fall in dealmaking also hurt revenues, which dropped
more than 7 percent to $86 billion across the world's top 10
investment banks despite a recovery for profit engines such as
bond trading, analytics group Coalition said last month.
Firms from Morgan Stanley, which in July announced
1,000 more layoffs to meet a 7 percent staff reduction target,
to Goldman Sachs are embarking on fresh rounds of staff
cuts in their trading and underwriting businesses. Goldman
expanded its cost-saving target by $500 million as the outlook
has dimmed for near-term revenue growth.
Last week European powerhouse Deutsche Bank said
it will cut an undisclosed number of jobs on top of 1,900 cuts
already announced and pledged to end a risk-taking culture
driven by short-term gain.
Swiss banks UBS and Credit Suisse are in
the process of making 3,500 job cuts each.