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The demise of the banking elite and rise of the smug compliance person

So you want to have a banking job? And you want to have a banking job in the so-called ‘front office’, where you will be able to earn lots of money and make calls on the direction of asset prices? Good luck to you. While hundreds of thousands of people work in banking worldwide, the number of people working in these niche, high-pay, high-prestige banking jobs, is small.

Figures from Coalition, a market research company owned by Standard & Poors, suggest a mere 53,500 people work in front office banking globally. 16,700 of them work in ‘origination and advisory’ (M&A and capital markets). 17,000 of them work in equities sales and trading. And 19,800 work in fixed income, currencies and commodities sales and trading.

Coalition tracks front office employment figures for the investment banking arms of Bank of America Merrill Lynch, Barclays Investment Bank, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, Morgan Stanley, Royal Bank of Scotland and UBS. Some of these firms don’t make their investment banking headcounts publicly available. However, Credit Suisse, RBS, UBS and Deutsche Bank alone said they had 71,000 people working in their combined investment banks in the first quarter.

In other words, most people working in investment banking are not really investment bankers.

Moreover, the coterie of elite banking types is shrinking. Nearly 11,000 front office bankers have been removed in the past two years according to Coalition. If it was hard to become an elite banker in 2011, it’s harder still in 2013.

And yet one area of banking is on a roll: compliance. When Mike Cavanagh, co-CEO of JPMorgan’s corporate and investment bank presented at the UBS Global Financial Services Conference yesterday,  he said compliance and control were a “top priority” for JPMorgan this year. Similarly, HSBC, which said this morning that it may make a further 21,000 job cuts before 2015, also said it was building in compliance (something which is possibly related to last year’s money laundering scandal).

The chart below, which admittedly covers all HSBC staff – and not just the nugget of front office investment bankers, illustrates the horror. The chart below that also illustrates why compliance is now your best bet.

The horror at HSBC

HSBC The horror

Source: HSBC

The comeliness of careers in compliance (at HSBC)

HSBC compliance

Source: HSBC

Comments (1)

Comments
  1. Charlie, the Oracle of our small provincial town, says “If compliance headcount increases by 2.5x and compliance cost by then our friends in compliance probably don’t have much to be smug about, on average”. Smart bloke is Charlie.

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