There are two clear winners on Wall Street through 2015 so far.

JPMorgan and Goldman Sachs lead the pack in global investment-bank revenue across fixed income, equities, and banking for the first nine months of the year, according to data-analytics company Coalition.

And they're pulling away from the competition.

JPMorgan and Goldman Sachs also ranked No. 1 and No. 2 in overall global revenues in the same period last year. But importantly, those two firms were also the two strongest performers this year compared to last year.

That's indicated by the green arrows in the graphic below.

Deutsche Bank and Citi are tied for third place in the investment-bank revenue ranking, followed by Morgan Stanley and Bank of America, which tied for fifth place. That marks an improvement for Morgan Stanley, which ranked sixth last year.

Credit Suisse, Barclays, UBS, and BNP Paribas round out the top 10.

In fixed income, JPMorgan and Citigroup rank first, while in equities Morgan Stanley ranks No. 1. JPMorgan ranks No. 1 in traditional investment banking.

Here are the full rankings from this year and last year, via Coalition:

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NEW YORK/LONDON (Reuters) - New Barclays Plc Chief Executive Jes Staley has approached his former JPMorgan colleague Blythe Masters to run the British bank's investment bank division, a person familiar with the matter said on Wednesday.

Staley has spoken to Masters about joining the bank late next year but it is not clear if she will, the source said. He declined to be named because details of the approach were confidential.

A spokesman for Barclays declined to comment.

Masters, best known for helping to create the credit-derivatives market in the 1990s, was the most high profile woman on Wall Street when she left JPMorgan last year after a 27 career with the bank.

She is currently the chief executive of Digital Asset Holdings, a startup designed to speed the trading of derivatives by using technology associated with bitcoin. She joined that company in March.

Barclays is shrinking its investment banking business and its current boss, Tom King, threatened to quit in the summer during a row with then-CEO Antony Jenkins over the future of the division, people familiar with the matter told Reuters at the time.

Chairman John McFarlane persuaded King to stay, but the row contributed to the ousting of Jenkins shortly after by McFarlane, the sources said.

There has been speculation in the media that King would retire next year.

Masters, King and Digital Asset Holdings did not respond to Reuters requests for comment.

The potential hire would be the latest step in Barclays' efforts to remake itself after being rocked by a series of scandals, including its role in fixing the benchmark interest-rate known as Libor.

Staley, who used to run JPMorgan's investment bank, only started as Barclays chief executive on Tuesday and is under pressure to set out a clear vision for the investment bank, where returns are the weakest in the group and costs need to be cut.

There have been multiple shifts in its strategy in recent years, and it is now focusing on its core U.S. and UK markets and cutting about 7,000 jobs.

Controversy

If Masters joined Barclays, the bank's top three executives, including Finance Director Tushar Morzaria, would all be JP Morgan veterans.

The U.S. bank's alumni feature heavily in the upper echelons of financial services, including Bill Winters, the new chief executive at Standard Chartered, Peter Hancock, the boss at insurer AIG and Charlie Scharf, the chief executive of Visa.

Masters, who was born in Oxford and grew up in Britain, started off in JP Morgan as an intern and worked her way up to run the bank's commodities trading operation, delivering pep talks to New York traders with a cut glass English accent.

A controversial figure, she helped develop and market credit derivatives, which were meant to insure investors if a loan went into default but instead blew huge holes in the balance sheet of financial firms such as insurer AIG during the 2007-08 financial crisis.

She was the chief financial officer of JP Morgan's investment bank from 2004 to 2007 before switching to run the commodities business, which she built into one of the biggest players in the industry.

She was back in the spotlight in July 2013, when JP Morgan agreed to pay $410 million to settle U.S. Federal Energy Regulatory Commission allegations that units Masters oversaw manipulated power markets, enriching itself at the expense of California and Midwest residents from 2010 to 2012.

JPMorgan sold its physical commodities arm in 2014 as regulatory changes made it a less profitable business for banks, and Masters left the bank.

 (Editing by Carmel Crimmins and Andrew Hay)

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Morgan Stanley is set to make deep cuts to a key trading division — and investors are trying to figure out what's going on.

News broke last week that the banking titan would cut its fixed income, currencies, and commodities (FICC) staff by a quarter before the end of the year.

Bond-trading revenue was down 42% year-on-year at Morgan Stanley in the third quarter. FICC revenue was weak across Wall Street, but the Morgan Stanley decline was especially pronounced.

UBS analyst Brennan Hawken thinks the FICC cut could be good for Morgan Stanley. He estimates that it could boost the firm's return on equity by as much as 125 basis points.

But there are a few big questions on investors' minds, according to Hawken. He said he hopes the questions will be answered in January, when the firm reports fourth-quarter earnings and is expected to provide a strategic update.

Hawken walked us through some of the important questions.

Will Morgan Stanley be left chasing after its competitors if FICC business picks up again?

Some investors worry that Morgan Stanley will be unprepared if bond-trading activity starts to pick up again after it cuts down its FICC division.

It wouldn't be the first time the firm has had to play catch-up. In the late 1990s and early 2000s, Morgan Stanley sat out while most of Wall Street charged into the fixed income business. It was not until after John Mack replaced Phil Purcell as CEO in 2005 that Morgan Stanley finally joined the FICC party and loaded its balance sheet with risk.

Then, the financial crisis hit and Morgan Stanley had to pull back from the fixed-income business. Most banks began taking down positions and laying off staff, but those that did stay in the game, namely JPMorgan and Goldman Sachs, profited hugely during a sharp rebound in activity.

Seeing that, Morgan Stanley reinvested in the FICC space in late 2009 and early 2010, again hiring new bond traders to rebuild the business — just as the rebound proved to be short-lived.

Now the firm is planning to cut back in FICC again, and some investors are worried that history could repeat itself.

What about the Ted Pick factor?

Another question on investors' minds, according to Hawken, is what Ted Pick's impact will be on the trading division.

Edward "Ted" Pick was promoted to head of the entire trading division in October. Previously, he had been running equities trading.

Pick is thought to be smart, shrewd, and hard-nosed.

"He's very well-respected, but he is a numbers guy," Hawken said.

He's viewed as a change agent for Morgan Stanley — and investors will want to know what changes he has in mind.

What does a 25% headcount reduction really mean?

The FICC cutback, originally reported by Bloomberg's Ambereen Choudhury, Michael J. Moore, and Hugh Son, is expected to amount to about 25% of headcount.

But as Hawken pointed out, it doesn't really mean anything. It doesn't automatically translate into a 25% reduction in costs, capital, or revenue.

"We all know that revenue will naturally go down, costs should go down, and capital should go down, but we want to know to what extent that will happen and what the timeline is," Hawken said.

Where will the capital be redeployed?

The other big question is whether the capital that is currently being used up by the fixed-income business will be redeployed and, if so, where.

In a note on Monday, Hawken estimated that a one-quarter reduction in FICC would add about 50 basis points to the firm's return on equity (ROE) if the capital is returned to shareholders. It would add 125 basis points if it's rolled into the equities or investment-banking divisions. If it's transferred to the wealth-management business, Hawken said, the ROE bump would be even higher.

We asked Hawken which option he thought would be most likely.

"Personally, I think the most likely is in equities and banking," Hawken said.

He noted that prime brokerage is one of the more capital-intensive parts of the equities business, and other firms are starting to cut back there as a result of capital requirements.

"Given that Ted Pick comes from equities, I think that that's where he's going to want to feed," he said.

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Goldman Sachs just made a handful of promotions in its mergers and acquisitions business.

The Wall Street firm promoted four bankers —  Stephan Feldgoise, Matt McClure, Mark Sorrell, and John Vaske — to leadership roles in the mergers and acquisitions, or M&A, division, according to an internal memo seen by Business Insider.

Goldman is currently ranked no. 1 for global M&A, with $1.76 trillion in deal activity this year, and no. 1 in US M&A, with $1.20 trillion in deal activity. Those are the highest M&A volumes by any bank on record, according to Dealogic.

Goldman was also the first bank on record to reach $1 trillion in US M&A advisory on November 23, 2015, according to Dealogic.

Feldgoise and McClure will become coheads of M&A in the Americas, according to the memo, while Sorrell will lead M&A in Europe, the Middle East, and Africa. 

Feldgoise is currently head of M&A for the Natural Resources Group, while McClure is M&A head for the Industrials Group. Sorrell is cohead of the UK investment bank.

Vaske, who is currently cochairman of the Natural Resources Group, will become cochairman of global M&A.

Feldgoise, McClure and Sorrell effectively replace Michael Carr and Gilberto Pozzi, who in February were named global coheads of M&A, along with Gregg Lemkau. Carr had been head of Americas M&A while Pozzi had been head of M&A in Europe, the Middle East and Africa.

Here's how the top Wall Street banks stack up in M&A, via Dealogic:

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Hedge fund analysts typically spend the first few years of their careers paying their dues working at an investment bank before transitioning to the buyside.

And it seems some banks produce more hedge fund analysts than others. 

According to SumZero, the online community of buyside investors, Goldman Sachs has produced more buyside analysts than any other bank.

Before joining SumZero, the site's members are asked to submit their employment information. Of the 12,000 members on the site, just under 2,000 of them reported working at investment banks before moving to the buyside.

Goldman has produced 50% more buyside analysts than the runner-up, JPMorgan. It's also notable that Goldman has a much smaller overall employee headcount than JPMorgan.

To recap, hedge fund analysts typically research companies or trade ideas and hand on their research to hedge fund portfolio managers, who ultimately decide whether to make a trade. 

While banking has always been the traditional route to the buyside, that's beginning to change.

Just last month, Barclays put out a big report detailing a shift taking place with more talent being drawn to Silicon Valley and banks decreasing the size of their capital markets and sales and trading classes. 

According to Barclays, the banks currently supply around 30% of investment talent at hedge funds, down from what they estimate used to be about 70% in the past.

Below are the results:

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Investment banking is an infamously high-stress career. It usually means working long hours, too.

So it's important for bankers and traders to unwind.

Goldman Sachs has been asking its leaders how they relax and "reset,"posting their responses on its careers blog. It will be updated throughout the month.

The series of posts comes as the bank takes strides to improve work-life balance for its employees.

In November, Goldman Sachs announced it would introduce new technological platforms to pick up some of the grunt work that junior bankers do, so they can focus on more rewarding, "value-add" work.

The posts also shed light on the home life of some of Goldman's most senior executives.

One theme to emerge is family time.

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David Solomon, cohead of investment banking

Solomon said spending time with his daughters was his favorite way to reset.

He likes to spend Sunday nights with his oldest daughter, doing an hour of yoga together and then going for dinner.

"It is a great way to end one week and start the next," said Solomon, who is based in New York.

He's also a fan of skiing and road biking.

John Waldron, cohead of investment banking

Solomon's cohead of investment banking also said spending quality time with his kids helped him reset.

Waldron, who has five children, will cheer on the older ones at sporting events or read bedtime stories to the younger ones.

He also does regular Saturday or Sunday one-on-one lunches with them.

Michael Sherwood, vice chairman of Goldman Sachs and co-CEO of Goldman Sachs International

Sherwood chooses soccer to unwind.

"It's a family tradition — I used to go with my dad, and now I take my kids," Sherwood said.

There's no shortage of soccer for Sherwood to watch in London, where he is based. His team of choice is Tottenham Hotspur, according to The Independent, though he also did a stint as a board director for Watford FC.

Investment bankers working on mergers and acquisitions had an incredible 2015.

A record-high $5.05 trillion in M&A activity took place during the year, according to Dealogic. The year also saw a record 69 deals of over $10 billion, including 10 transactions of over $50 billion, also a record high.

Revenue from these transactions, at $23.5 billion, was the highest of any year but 2007.

That's despite overall global investment-banking revenue being down 8% from 2014, according to Dealogic.

Here are some of the other records broken in 2015:

• In the US, targeted M&A volume reached a new record high (up 59% year-on-year), while Asia Pacific targeted M&A broke the $1 trillion mark, a record high.
• By sector, healthcare M&A was up 66% from the prior year, hitting a new full-year record of $724.4 billion. Tech M&A hit a record high in terms of volume and activity.
• There was also record spin-off volume and near-record highs on global cross-border M&A.
• Goldman Sachs, Morgan Stanley, JPMorgan, and Bank of America Merrill Lynch all reached record highs in terms of annual advisory volumes.

If that doesn't give you a sense of the kind of year it was, one chart in Dealogic's full-year M&A review might.

It lists the top 10 announced deals of the year, and under "deal characteristics," it shows that every deal broke or nearly broke a record.

That includes Anheuser-Busch InBev's deal for SABMiller, the biggest food and beverage deal on record, and the Dow-DuPont deal, the biggest chemicals deal on record.

Have a look:

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2015 will be a year to forget for most investment banks.

Last year was the worst year since 2008 in terms of growth in fee revenue – the money banks make advising clients on financial activities such as bond or share offerings.

The total fee haul fell by 7.9%, the worst decline since 2008 when fees cratered by 35.6%.

Thomson Reuters put together a huge report card for the year, which shows just how bad things got. Here's how it looked compared to other years:Fee revenue was down 8% globally, dragged down by European and Asian economic woes. Here's the map:All this translates to lower pay in the industry, as it contends with tougher capital rules, shrinking revenue and threats from upstarts in the financial technology sector.

London-based investment bankers expect a measly bonus of just £24,461 ($35,960) when their cheques drop this month, and now rank right at the bottom of the pile when it comes to how much they expect to get in bonuses.

It wasn't all bad. Bankers in mergers and acquisitions had an incredible year driven by mega-deals. The standout deal the $160 billion tie-up between Pfizer and Allergan.

In 2015, worldwide levels of M&A reached an all-time high of $4.2 trillion (£2.9 trillion) as big companies took advantage of the easy financing conditions to get deals done while the cheap money flows. That broke the previous record of $4.1 trillion set before the crisis, according to Thomson Reuters data.

US giants Goldman Sachs, Morgan Stanley and JP Morgan dominated the market, but smaller boutique firms, such as Centerview Partners, grew their fee revenue way beyond the market average.

Here's the chart from Thomson Reuters:

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Investment-bank revenues have been more or less flat for years, and they seem likely to stay that way for a while.

In a note Wednesday, JPMorgan's Kian Abouhossein suggested the banks may have reached a "new normal"— and it's right around the 2005-2006 revenue levels.

Abouhossein estimates that clean investment-bank revenues — or revenue from equities, fixed income, and investment banking, excluding write-downs and accounting adjustments — will total $136.8 billion in 2016.

He expects that to follow a total of $138.8 billion in 2015, and 2017 should be right in that ballpark too.

By those estimates, it looks as if revenues peaked in 2009 at $207.7 billion. They had grown steadily from about $75.5 billion in the early 2000s, dropped off sharply in 2008, peaked in 2009, and then plateaued.

The "new normal" is somewhere in between the 2005 total of $126.2 billion and the 2006 total of $165.9 billion.

And it looks as if that may not change anytime soon.

In another slide, Abouhossein sets out his estimates for individual business lines in 2016 and 2017. He expects pretty much every single business line to report lower revenues in 2016 than in 2015.

The exceptions are prime services, where revenues are tipped to be flat, and rates and currencies, where revenues are expected to increase.

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The path has been cleared for Morgan Stanley executive Colm Kelleher.

Currently president of the firm's institutional-banking and trading division, he has been named sole president of the firm.

And the current president of the wealth-management business, Greg Fleming, is leaving Morgan Stanley.

Kelleher will now oversee that business, too — a huge new role, as wealth management is a key division for the company.

Kelleher and Fleming had been seen as potential successors to CEO James Gorman.

In a memo to employees on Wednesday, Gorman wrote: "I am delighted to announce that Colm Kelleher has been named President of Morgan Stanley. Greg Fleming has decided to leave the Firm to pursue other opportunities."

Kelleher is nothing if not a survivor. He has stayed on at the bank through a number of tough years and navigated a series of changes in the bank's senior ranks.

A survivor

Kelleher, 58, joined Morgan Stanley in 1989 and spent 15 years in the fixed-income division, a business the bank is now de-emphasizing. He then led the global-capital markets business before serving as CFO and cohead of corporate strategy during the difficult period of the financial crisis.

Of note, he is one year older than CEO Gorman.

"For the last five years, he has led our ISG business, navigating challenging markets and adapting to a new regulatory environment while maintaining our world class equities and banking franchises," Gorman said in the memo.

During that period, Kelleher won out in a battle of wills with dealmaker Paul Taubman in 2012. Kelleher and Taubman had been the top two executives in trading and banking, but had a rocky relationship. In the end, Kelleher was promoted and Taubman was left to launch his own advisory firm.

With the latest promotion, Kelleher has been handed even more power at the bank.

"I very much look forward to working with Colm as my partner in leading the Firm over the next several years," Gorman wrote in the memo on Wednesday.

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Morgan Stanley is rotating its star players.

On Wednesday, the firm's president of institutional securities, Colm Kelleher, was handed control of wealth management as well. Greg Fleming, who had been the head of wealth management, quit the firm.

Morgan Stanley also announced that Andy Saperstein would switch from his role as co-COO of institutional securities to become cohead of wealth management. Saperstein had previously been in the wealth-management division before moving to the co-COO role.

The management shakeout is not the only example we've seen of folks moving back and forth among the institutional-securities group— which encompasses traditional investment banking and dealmaking as well as capital-markets trading and sales — and other parts of the bank.

In March, investment banker Raj Dhanda moved to the wealth-management division. He had been coheading the capital-markets team within the institutional-securities division.

At the time, Gorman said in a memo that the bank was "cross-pollinating key leaders across our major businesses" to build a single firm-wide culture.

In October, Dan Simkowitz moved from his role as cohead of global capital markets to become head of investment management, the firm's asset-management division.

Prized divisions

The strategy here is to bring wealth management closer together with the investment bank both culturally and from a business perspective. Institutional services and wealth management are Morgan Stanley's two most prized divisions, but there has been tension between the two units in the past.

Mike Mayo, a veteran banks analyst at CLSA, told Business Insider the changes were "part of the effort to create one firm culture for two decades since [the] Dean Witter merger."

He's referring to the 1997 merger between Morgan Stanley, then solely an investment bank, and the retail brokerage Dean Witter Reynolds. The two firms had very different cultures.

Then there is the business case for combining.

In December, UBS analyst Brennan Hawken described the "Morgan Stanley story" as "the idea that this could be a wealth management firm connected with a really large, really outstanding equities franchise and investment bank."

UBS, which like Morgan Stanley has a big wealth-management business and an equities-focused investment bank, has previously said its wealth-management division is the biggest client of the investment bank.

That means there is a lot of logic to having the two units collaborating and swapping executives.

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The winds are changing on Wall Street, and Wells Fargo (WFC) could be the biggest beneficiary.

That's according to a note from Goldman Sachs analyst Richard Ramsden, who writes that the bank is well positioned for continued interest-rate hikes from the Federal Reserve.

Ramsden upgraded Wells to "buy."

It has to do with the makeup of Wells Fargo's deposit base.

Ramsden writes that as the Fed continues hiking interest rates this year, "retail, small balance deposit bases" will see the least pricing pressure.

In other words, smaller depositors are less likely to go shopping for better terms elsewhere. That means there will be less pressure on banks to offer better terms, and therefore a higher net-interest margin, which marks the difference between interest income and interest paid out.

"This bodes well for WFC, as their average deposit balances appear low and a sizeable share of their deposits are to consumers," Ramsden said.

The analysts anticipate a 3% upside to earnings for Wells Fargo during the first 100-basis-point rate increase — that is, most likely until middle or late 2017.

Worst-case scenario

Even in a more challenging environment, Wells is still among the best-positioned banks on the Street.

"If we get an environment where oil prices grind lower, China slows, and rates stay flat, we see the least downside to WFC's '16E EPS," Ramsden writes.

He would expect a 6% decrease in earnings versus a 13% decrease for other major banks.

But what if there's an emerging-merging market slowdown? "Only 2% of [Wells'] loans are to emerging markets," Ramsden notes.

And in the event of energy prices dropping even lower? "Energy loans are only 2% of Wells' book, implying a 2-3% EPS impact."

Ramsden points to Wells' ability to grow earnings per share "inorganically," referring to its purchase of General Electric's financial assets in 2015, which could set it apart from the competition in a lower-growth environment.

He also points to Wells' dividend growth, and the Federal Reserve's changing regulations for global systematically important banks, for which Wells is also better positioned than the competition.

"WFC looks likely to outperform if the environment stays tough," Ramsden writes.

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Bank stocks are on a tough run. 

In a recent note to clients, Deutsche Bank's Matt O'Connor pointed out that the KBW Nasdaq bank index is down 17% from its highs in July last year. It's down 15% since early December, and 9% so far this year. 

There are a lot of questions circling, including what to expect going forward in 2016.

O'Connor pointed to two potential downside risks for banks this year.

Higher credit costs

O'Connor and his team expect a 10 basis point increase in "loan loss provision expenses"— that is, expenses put aside to cover bad loans that customers default on or need to renegotiate. 

That doesn't bode well for bank earnings. According to the note, every 10 bp increase in loan loss provision expenses this year will translate into about a 4% drop in overall earnings. 

Weaker markets revenues

One of the biggest things to hurt bank earnings last year was a drop in trading revenues. But O'Connor says we're less likely to see a similarly outsized drop this year, thanks to a sharp reduction in inventory and the fact that traders are taking fewer risks.

That said, any macroeconomic weakness will still hurt bank earnings, in O'Connor's view. He estimates a potential earnings drop of  7-10% for Bank of America, Citigroup, and JPMorgan, and a 25% drop at Goldman Sachs and Morgan Stanley.

That estimate is based on a 10% cut in investment banking and trading fees, a 20% cut to private equity and investment revenue, and a 5% cut to wealth management, asset management, and brokerage fees.

That sounds pretty bad, but remember, downside risk is a worst-case scenario estimate.

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Airbnb just won some business with Morgan Stanley.

On Monday, the global investment bank told its staff it would allow all employees to use Airbnb Business Travel for work-related travel as part of its corporate travel policy, according to people familiar with the matter.

Airbnb Business Travel is a feature offered by the apartment-sharing service to employees of participating companies.

It provides transparency to travel managers in terms of expenses paid, and it keeps employees from having to file for those expenses.

Morgan Stanley employees — particularly the younger ones — are huge fans of Airbnb, according to people at the firm, and had expressed interest in using its services for work travel.

The firm, meanwhile, is interested in providing its workers with flexible travel options, according to the people.

The travel tie-up also solidifies Morgan Stanley's relationship with one of the hottest tech companies around.

In December, Airbnb confirmed it had raised close to $1.5 billion in its latest funding round, valuing the company at $25.5 billion.

Also on Monday, it was reported that Morgan Stanley's high-net-worth clients would be able to invest in the ride-sharing app Uber's latest fund-raising round, which values that company at $62.5 billion.

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Wall Street banks had a rough end of 2015, and now analysts are looking ahead at what's to come this year.

Societe Generale bank analyst Geoff Dawes and his team put together a "Banks Handbook" for the year ahead and took a deep dive into the issues facing the top banks in the US and Europe.

Among other things, they listed the three biggest strategic challenges each of the banks is facing.

These range from adapting to new regulatory hurdles to following through on restructuring plans.

We put together a list of 10 major banks and the the biggest challenges they must overcome this year, via Dawes' note.

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Goldman Sachs

Maintaining growth in banking revenues after a period of robust growth.

In the third quarter of 2015, Goldman Sachs produced year-to-date net revenues of $5.48 billion— it's highest performance for that period since 2007.

Ensuring large share buyback policy can be resumed after being impacted by 2015 DFAST process

DFAST refers to the Dodd-Frank Act stress test, which assesses whether large banks have enough capital to absorb losses in the event of an economic crisis. Goldman had to submit a revised dividend and stock-buyback plan to the Fed, after finding that the initial plan would have left the bank short of capital in a stressed scenario. 

Managing potentially large RWA inflation from the BCBS Trading Book review

RWA refers to "risk-weighted assets," which measures a bank's assets weighted according to their riskiness. The BCBS Trading Book review refers to a revised market risk framework from the Basel Committee on Banking Supervision which looks set to increase some risk weightings, which in turn will likely inflate total RWAs.

That is important, as it could mean banks will have to hold more capital against those assets.

RWAs are used to calculate bank capital ratios (a measure of stability), and any RWA inflation could lead to a need for more capital.

Morgan Stanley

Implementing management's strategy to improve wealth management operations.

Wealth management has been a key focus for Morgan Stanley since the financial crisis and is its most profitable business. The president of the wealth management division, Greg Fleming, unexpectedly left the bank last week, and that team is now under the purview of president Colm Kelleher.

Deleveraging the FICC business adequately to improve ROE.

In November, news broke that Morgan Stanley would lay off 25% of its fixed income, currencies, and commodities team to help improve the bank's return-on-equity. UBS bank analyst Brennan Hawken estimated at the time that a 25% FICC cut could boost ROE by 125 basis points or more, if reinvested into other divisions of the firm.

Managing the RWA impact from the BCBS Trading Book review.

Like at Goldman Sachs, the impact of the Basel Committee trading book review on risk-weighted assets is a concern for Morgan Stanley too.

JPMorgan

Optimising overall business risk, complexity, size and manage potential GSIB related add-on in stress tests

JPMorgan tops a number of global bank rankings in terms of how interconnected it is with other banks, how difficult it would be to replicate or replace, and how complex its business is. 

Regulators are focused on these kinds of institutions, which now have to hold more capital than smaller, less-interconnected institutions. 

Optimizing client relationship while minimizing the downside risks to business/revenues

JPMorgan has been focusing on cutting the numbers of clients it deals with. Daniel Pinto, chief executive of the corporate and investment bank at JPMorgan, alluded to the effort in a November presentation, saying: "What we have done in the last few years, and we are really more and more focused in the last couple, we do a lot of work on client planning." 

Whether to step-up investments in Asia to bolster presence/growth

JPMorgan finished 2015 as the number one investment bank in the US, and the number one investment bank in Europe, according to Dealogic. In Asia, it ranked seventh.

Morgan Stanley just reported fourth-quarter earnings that beat on the top and bottom lines. 

The firm also provided a look into how it has transformed over the past six years in a "Strategic Update" presentation.

The bank has grown its wealth management division pretty dramatically.

The fixed income, currencies, and commodities trading division is now a much smaller chunk of the firm's revenues, while equities trading and investment banking make up bigger chunks.

Overall net revenue, excluding accounting adjustments, has jumped from $28.7 billion in 2009 to $34.5 billion in 2015.

Have a look: 

Late last year, news broke that Morgan Stanley would cut about 25% of its FICC headcount. Those layoffs started to take place in December.

Earlier this year, Greg Fleming, the president of the prized wealth management business, departed the firm. Executive Colm Kelleher took over as sole president of the firm.

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JPMorgan on Thursday told its investment bankers that they should take weekends off when they're not working on imminent deals.

The new initiative, dubbed "Pencils Down," aims to return some "life" to the work-life balance of bankers.

It's something that firms across Wall Street are doing, as the industry tries to retain and recruit young employees.

Some banks fix the number of days off employees must take each month, while others limit the hours that young staffers can work.

At JPMorgan, the hope is that the new rule will lead to a "structural" change in the bank's work culture, the bank's head of human resources, John Donnelly, told Business Insider. 

(To get the must-read guide to the key issues at every major Wall Street bank, click here.)

The investment-banking division will work closely with human resources to monitor weekend work and enforce the guidelines.

"Under specific situations and emergencies, we all understand that sometimes you have to be in on weekends," Donnelly said. "But making it a routine and a regular, expected thing is really just not necessary."

'Not expected'

On an internal call with bankers on Thursday, JPMorgan's global banking head, Carlos Hernandez, said that employees would not be expected to work on weekends unless they're on a live deal — that is, one that's going to be announced the following Monday.

But these types of changes are tough to enact.

The guidelines aren't always very rigid, and that's where they fall into trouble.

Usually, if there's a way to keep bankers at their desks, bosses will find it. Banking is a client-serving business, so even if there isn't an imminent deal under way, there's always work to do for a client, or a potential client.

And as one former analyst at another bank told Business Insider, there's a difference between not being expected to work certain days or hours and not being allowed to. He said only the latter would really be enforceable.

Guidelines, rather than rules, are susceptible to manipulation, and there's little the human-resources team or anyone else can do when bosses ask for work.

For example, this analyst said he once worked 109.5 hours in a single week. (That's 16 hours each day.) He did get a call from human resources, but it was just to say, "I just wanted to check in and see if you're okay."

The HR rep couldn't do anything else to remedy the situation.

JPMorgan is not the first bank to make guidelines aimed at improving work-life balance, especially for junior bankers. 

At Bank of America, first- and second-year analysts are expected to take at least four days off per month. At Citi, analysts and associates are expected to be out of the office from 10 p.m. Friday until 10 a.m. Sunday, every weekend. And JPMorgan itself already offers employees one optional "protected" weekend per month.

These types of policies tend to be more carefully enforced with interns than with full-time staff.

But a common complaint among interns is that not being allowed to be in the office on the weekend means having to work even longer hours during the week.

One former Goldman Sachs intern told us that if he could do it over, he would buy a personal computer to work on from home in the evenings and on weekends so that he could keep up. 

Loopholes

The former analyst we spoke to described the way his bosses got around his bank's protected weekend rules.

"If we had to work on Saturday, the point person on the project was supposed to send an email to the [human resources] officer saying 'I need this person — here's why I need them,'" he said.

Human resources would aggregate all the requests and send them to the group head for approval.

Here's where it breaks down: The group head would tell the VP "I need this work done," so the VP would tell the analyst to do the work, and then HR would seek approval for the analyst to work the weekend ... from the very group head who asked for the work in the first place.

"So of course every single Friday we get the email, you know, 'I approve all work for me,'" the former analyst said.

JPMorgan's new weekend policy is structured a little differently. The firm said it's coming from the top ranks of the investment bank — that is, from Hernandez himself, who will ultimately be in charge of enforcement.

Top down

The firm will track banker hours weekly in a report that Hernandez reviews, and anyone works too many hours will get a call from him to find out why and what can be done to fix the problem.

"What the investment bank is trying to do is very specifically tell the seniors, not just the juniors, the type of activity that can be done on the weekends," said JPMorgan's HR head Donnelly. 

"I think by really making it something top down and having the seniors also lead by example, it'll work — because it's a structural change in how we're approaching things."

JPMorgan also announced an expansion to its accelerated-promotions program for excellent performers, as well as a new mentorship program to help junior bankers get more face time with senior bankers, and several new technological developments to increase efficiency within the investment bank.

Goldman Sachs announced similar initiatives in November. 

SEE ALSO: The Must-Read Guide to the Key Issues at Every Major Wall Street Bank

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Morgan Stanley just released a list of its newest managing directors.

This year's list has 156 names, up from 151 last year.

Thirty-three, or 21%, of the new MDs are women. That's on par with last year, according to a Morgan Stanley representative.

Fifty-four percent of the class works in the Institutional Securities — that is, investment banking and sales and trading — division, up from 52% last year.

Here is the breakdown by region:

• 62% of the new MDs work in the US — down from 64% last year.
• 21% work in Europe, the Middle East, and Africa — down from 26% last year.
• 17% of the new MD class works in Asia — up from 13% last year.

Goldman Sachs named 425 new managing directors in November. That firm promotes new managing directors every two years, as opposed to every year.

To get the must-read guide to the key issues at every major Wall Street bank, click here.

Morgan Stanley last week reported fourth-quarter earnings that beat expectations. The disastrous fixed income, currencies, and commodities division, however, missed expectations and was down year-on-year. The firm began cutting 25% of its fixed-income headcount late last year.

Earlier this month, Greg Fleming, the president of Morgan Stanley's prized wealth-management business, left the firm.

Morgan Stanley CEO James Gorman took a 6.7% pay cut for 2015.

Here's the 2016 managing director list:

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Deutsche Bank on Thursday reported a $7.4 billion loss for 2015 and announced that management's bonuses would be canceled.

The release was followed by a nearly three-hour phone call with CEO John Cryan, in which he sounded pretty glum.

"The bank I would like to run at the moment is Wells Fargo," Cryan said at one point on the call, according to the FT's Laura Noonan. 

"I would love to make 400 basis points in retail banking and have a relatively easy life. Unfortunately there are lots of things I wish for that are not going to come true."

Cryan, who took the reins as CEO in July, said he felt personally responsible for the $7 billion loss — "all of it."

"Sometimes I go home in the evening and I say to my wife I wish some people would actually think I had some talent for running a company and not just cleaning it up," he said.

(To get the must-read guide to the key issues at every major Wall Street bank, click here.)

Deutsche Bank confirmed in its 2015 results statement that it took a €1.15 billion pretax loss in the fourth quarter, compared with a net profit of €323 million a year earlier.

This was mainly due to €1.2 billion worth of litigation charges for the period. It brought total litigation charges to €5.2 billion for 2015, up from €2 billion booked in 2014.

The bank had warned of the enormous loss in a preliminary announcement last week.

Wells Fargo, meanwhile, is expected to be a big winner in 2016 as the Federal Reserve continues to hike interest rates. Analysts anticipate a 3% upside to earnings for the bank during the first 100-basis-point increase, or until mid or late 2017.

Cryan said he looked forward to the day that Deutsche Bank would be functioning more smoothly too.

"Once we have the bank set up, its cost bases, its capital in a good place it should be fun running a company like this," he said on the call.

Read more of Cryan's comments in the FT »

SEE ALSO: Senior bankers are doing something unheard of with their bonuses to hold on to junior staff

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Investment banks have had an awful start to the year.

Dealmakers are blaming market volatility for a slowdown in mergers and acquisitions and initial public offerings. No company has gone public in US markets in 2016, making January the first IPO-free month since September 2011, according to Dealogic.

And the results are similar across all investment-banking businesses.

To illustrate just how weak the banks' performance was last month, Credit Suisse analyst Susan Roth Katzke put together a chart showing industry trends based on the run rate for the first quarter of 2016.

Virtually every business was trending down — both year-on-year and quarter-on-quarter.

According to the note, announced M&A volumes are tracking down 39% year-on-year, though the backlog is up 14%. Equity underwriting volumes are tracking down 48% on "materially lower IPO volumes," while debt underwriting is tracking down 20% year-on-year.

The note said:

Well… it was far from what we'd hoped for coming into the new year. Macro risk/risk aversion is taking its toll, with asset prices largely down, equity and fixed income funds experiencing net outflows, and most investment banking activity well off both year ago and fourth quarter levels. There's some silver lining in that trading volumes are up, both year over year and quarter to quarter — how profitable will that activity prove to have been… the lack of primary activity and negative asset price changes don't help, but at least there's activity. All in, we'll need to see some stabilization in prices (oil, equities and credit) to re-build/sustain the confidence needed to support our capital markets revenue forecasts.

SEE ALSO: Wall Street's deal machine is shutting down

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