With losses around bad loans shrinking in the first half of this year, there’s a growing sense of expectation that a number of firms are set to increase headcount in their business banking functions in the second half.

Lloyds last week posted a profit of 742m in its commercial division in the second quarter (compared to a 3.2bn loss last year), while HSBC has signalled a need to bolster headcount in this area, although the majority of this will be focused on emerging markets, and Santander has been building its corporate banking operation.

Possible lending targets for all UK banks outlined by George Osbourne last week could also spur a need to staff up in this area.

Barclays has just unveiled a string of hires to its corporate division – John Traynor, Giles Herman, Baihas Baghdadi and Reyes Stolker – as it builds out its cash and trade team.

JPMorgan also this week unveiled Daniel Zelikow as head of its international public-sector group within its recently established corporate banking unit, and Bank of America has previously indicated a desire to grow in this area.

“We’ve seen a significant uptick in the number of corporate banking roles coming to market recently, particularly for business development roles,” says Paul Hunt, managing director of Healy Hunt Partners.

“Banks are selectively recruiting now, with the expectation the mid-to-senior hires will come on board in the latter part of this year. It may be until Q1-2 2011 before they significantly add value, which is why buttons are being pushed now.”

Much of this recruitment will be replacement hires, after a number of UK banks cut headcount back significantly in their corporate and commercial divisions in 2009.

“After last year’s carnage banks are going to need to bulk up again,” says one senior business development manager within a UK corporate bank. “However, one problem they face is that there’s a limited supply of these people, and number of them have been taken off the front line to focus on the bad books.”

But more people are coming forward for these roles, having been convinced about the new opportunities available, suggests Hunt.

“Corporate banking candidates have largely been sitting tight for the last 18 months, and only in the past 6-9 months or so have they been willing to look for new opportunities,” he says.