UK
After a promising second half of 2009, equity capital markets (ECM) volumes in Europe have stalled in Q1 of this year. Is there a chance that investment banks may have prematurely staffed up in this area?
Globally speaking, the ECM space looks relatively healthy – volumes have increased 67% year-on-year to stand at $189.2bn, according to figures from Dealogic. However, in Europe, revenues still look relatively diminutive – $693m was generated between January to April 2010, compared to over $1.2bn during the same period last year.
There’s also a looming possibility that rights issue fees could be examined by the Office of Fair Trading in the coming months.
Jason Kennedy, managing director of headhunters Kennedy Associates, says: “A lot of banks added ECM staff in the second half of 2009 with the expectation activity would increase. Instead, it’s dropped off and I would expect to see some redundancies if the situation doesn’t improve by June.”
“There are key hires and replacements going ahead, but there’s a general over-capacity considering the current volume of work,” adds Jonathan Evans, chairman at Sammons Associates.
Some banks have indicated their desire to recruit in this area, however. Barclays Capital intends to add 15-20 to its EMEA ECM team this year, HSBC has recently recruited John Crompton as head of equity capital markets, while SocGen wants to build in this area.
Headhunters tell us that RBC Capital Markets, Macquarie and Investec are also hiring.
Stephane Rambosson, managing partner of executive advisory and search firm Veni Partners, says: “A number of investment banks have been talking about recruiting senior ECM professionals, but very few have actually committed to the hire. There is clearly a limited talent pool in this area, and very few good people are genuinely open to moving currently. ECM teams are relatively small, and most firms seem happy to keep them that way.”
It is questionable just how much fat there is to trim in European ECM teams.
James Sproule, head of capital markets research at Accenture, says: “Banks have been very cautious about expanding their ECM teams during busier times. Besides, we’re expecting a slow, but reasonably positive recovery – equity issuance will never match the boom years, but we expect it to be healthy.”
I work for one of the Elderly Nursing homes, I mean banks mentioned above and can confirm these statements. Good senior staff are being hired externally, but movement for junior staff is very limited, even more limited if you are trying to make the move internally from anoher desk or a MO/BO function.