7 Is Just A Number

Over the past several months, there has been hype about the prospect of the Chinese renminbi (RMB) weakening previous 7 per US money, despite no evidence that 7 is a magical quantity. China’s central bank or investment company, the People’s Bank or investment company of China (PBOC), experienced denied that it was centered on defending 7, and the IMF said it wasn’t significant.

So when the RMB finally broke 7, it was treated by the mass media as a dramatic event, but we believe, this will soon pass. It is likely that the timing of the move was deliberate, following president Trump’s latest round of tariffs. RMB devaluation: What occurred? China, a haven of balance? We believe Xi Jinping is unlikely to vacation resort to a significant devaluation (that was not what happened last night) to respond to Trump. China’s consumer story-the largest part of its economy-remains pretty healthy, as will employment and income growth, so there is absolutely no justification for Xi to stress. We expect this longer-term pattern to continue. Party hasn’t resorted to significant devaluation before, including through the Global and Asian Financial Crises.

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However, it hasn’t changed it enough. Support and Technology staff need to watch their backs. In the presentation accompanying its fourth quarter results, BNP said it plans to ‘streamline and mutualize’ its IT and back office services. It also plans to withdraw from unprofitable and subscale businesses and also to close down peripheral locations.

More favorably, BNP plans to purchase its digital trading platforms and also to enhance the performance of its FX and derivatives businesses. Citi hasn’t been very granular about programs because of its institutional clients group (ICG) in 2019. Over the bank or investment company as it programs to go after its ‘2020 financial focuses on’, including a 12% return on tangible common equity and a better efficiency proportion.

If anyone needs to watch their backs at Citi right now, it’s probably G10 rates investors. CFO John Gerspach blamed G10 rates investors for the bank’s 21% year-on-year drop in fourth one fourth fixed income currencies and goods revenues. Credit Suisse: Still no major cost slicing. It might be presumed that Credit Suisse must cut costs in its marketplaces business. After all, the business made two major losses in the fourth quarter and exceeded its cost targets. CEO Tidjane Thiam is, however, having none from it.

Thiam in the bank’s fourth quarter investor call, adding that Credit Suisse’s global marketplaces profits should increase as other banks are slicing costs this year. Away from global markets, Credit Suisse’s strategy also remains unchanged. It’s still about leveraging the partnership between the investment bank or investment company and the global prosperity management business while ‘digitalizing’ whenever you can.

If you work in ‘International Trading Solutions’, which sits at the cross section between marketplaces and wealth management, depend yourself lucky. Despite its avowal that “deep” restructuring has ended, Credit Suisse will be trying out costs still. CFO David Mathers says the bank is still engaged in “process reengineering” of both its front and back office divisions.

While rumours rumble on about Deutsche Bank’s potential merger with Commerzbank, This year DB bankers are supposed to be chasing income growth. Theoretically, cuts to the front office at Deutsche’s corporate and investment bank were done this past year. From on in here, it’s about enlargement. In the demonstration associated its fourth quarter results, Deutsche said it programs to grow in “targeted areas.” This means FX.

It also means “targeted hiring in fix income and debts origination,” a few of which we’ve seen already. At the same time, there are signals that Deutsche is quietly adding minds to its equities business. More ominously, Deutsche has increased its cost cutting target and there’s some skepticism that its revenue targets can be met (in which case the lender freely admits that costs might need to be cut more zealously).

Life at Goldman Sachs is on keep while the bank or investment company conducts a front side to back review of its businesses under CEO David Solomon. The email address details are due in ‘springtime’, so watch this space. Fixed income currencies and commodities will likely be hard hit – commodities job slashes were flagged last month by the Wall Street Journal.