Bloomberg News

Layoffs Loom for Bond Managing Directors, Hintz Says: Tom Keene

June 16, 2011

June 16 (Bloomberg) -- Layoffs are coming for Wall Street’s fixed-income managing directors, said Brad Hintz, an analyst at Sanford C. Bernstein & Co., as trading revenue and interest-rate volatility have plummeted.

The percent of managing directors on staff at investment banks are going to drop about 10 percent from 15 percent at well-run firms and 20 percent at badly run firms, Hintz said in a television interview on “Bloomberg Surveillance Midday” with Tom Keene.

“You don’t have to fire lots of people, you just need to fire expensive people,” said New York-based Hintz, adding the 40 percent of compensation that goes to managing directors isn’t sustainable. “You are going to change the shape of the pyramid.”

This comes as fixed-income trading revenue at the five biggest Wall Street banks -- Goldman Sachs Group Inc., JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., and Morgan Stanley -- fell 25 percent in the first quarter, compared with the first three months of 2010.

Volatility in the interest rates market has fallen to almost pre-crisis levels as the Merrill Option Volatility Estimate, or MOVE, has averaged 89.43 basis points so far this year, headed for the lowest since it averaged 85 basis points in 2007. The index is at 85.9 basis points, down from a 12-month high of 125.2 on Dec. 15.

--With assistance from Michael J. Moore in New York. Editors: Paul Cox, Greg Storey

To contact the reporter on this story: Cordell Eddings in New York at

To contact the editor responsible for this story: Dave Liedtka at

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