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Nordic financial services: What was hot, and what was not, in 2010?

We may not yet be back to the heady days of 2007 and 2008, but for the Nordics the theme for 2010 was very much “slow and steady wins the race”, with banks reporting a sustained and consistent recovery from the woes of 2009.

2010 was a good year for…

Capital markets

The Nordic region experienced a surge of IPOs, fund-raising and M&As during 2010, activity that in turn fuelled demand for capital markets and M&A professionals.

Data provider Dealogic argued in November that ECM volumes in the Nordic region this year had been the third highest on record, behind only 2007 and 2000, while earlier in the year research body mergermarket calculated the market had seen a sharp bounce-back, with M&As up 40% in the first six months compared with a 40% slide in the same period in 2009.

Professionals with expertise in energy, mining, utilities, defence, chemicals and healthcare were all in demand. During the year Nordea also undertook a wholesale restructuring of its capital markets function in an effort to raise its profile among Sweden’s big multi-nationals.

“As the year has gone on there has been an increasing focus on front-office roles, largely led by better deal-flow coming through, business in general picking up and more corporate actions, with areas such as capital markets and equities often being the beneficiaries,” explains Wictor Bonde of recruiter Michael Page in Stockholm.

Private equity

Private equity teams and firms in the region have had a good 2010.

Research by Norwegian asset manager Argentum Fondsinvesteringer AS suggested private equity investment in the Nordic countries was gradually returning to pre-crisis levels, while data provider Dealogic showed that there was significant increase in the value of Nordic buyouts.

“We have certainly seen a desire among mid-market to larger end private equity firms to build up the number of Scandinavians in their teams, both in London and locally within the region, with the emphasis being on junior- or associate-level appointments,” agrees Gail McManus, partner at PER Recruitment.

“Within the Nordic region itself, demand has tended to be for those who have worked in or have had experience of or exposure to the London market. We have also been seeing more demand for non-Swedes, so Danes, Finns and Norwegians, yet often to be working out of Stockholm,” she adds.

Whether this will continue into 2011 is, however, a moot point, with Tomas Ekman, partner in 3i’s Stockholm office, arguing that the level of funds being raised in 2011 and 2012 could be lower than it was this year.

Recruitment agencies

Recruitment firms can often be a useful economic bellwether, and the fact financial services recruiters returned to hiring this year was an indicator of the wider health of the market.

“We overall had a good year – revenue for the third quarter this year was plus 37% gross profit on group level, compared to 2009,” points out Michael Page’s Bonde.

“Across the market as a whole we have been seeing increased demand for recruitment services and, after many firms freezing recruitment in 2009, there has been significant hiring again this year, which bodes well for 2011 too,” he adds.

And 2010 was a bad year for

Ongoing redundancies

Despite the recovery, it was not all good news, as the big banks continued to make redundancies during 2010.

SEB, for one, shed more than 1,000 staff during the year, many of them in the still-struggling Baltics, and Swedbank laid off to some 1,700 workers, mostly from its Russian and Ukrainian operations. DnB Nor continued its deep branch closure and redundancy programme.

While Swedbank during the year also announced a new “Young Jobs” training programme designed to attract 1,000 new trainees it was a tough year by and large for graduates, suggests Anders Borg, president of recruiter Hansar International.

“The job market as a whole has been weak, and for graduates and entry-level positions it has been tough, as it was in 2009. Banks have just not been taking in the same level of intake at this level as when times were good. There are many budding investment managers who, as a result, are still living with their parents and cannot get that first foot on the ladder,” he says.

Risk and compliance

After being one of the (few) bright spots of 2009, demand for risk and compliance specialists was more muted during 2010, according to recruiters.

“Demand for compliance professionals has drastically lessened this year, partly because most teams are now pretty much fully-staffed but also because we’re waiting for the Basel III directives and how they will affect the market. Demand for risk professionals has also declined somewhat, though we are still having discussions, mainly regarding more senior-level roles,” says Bonde.

Bonuses

The bare figures may have been looking better over the year, but political and public pressure meant this was not (by and large) translated into higher bonuses during 2010.

Swedbank in July risked public wrath by increasing bonus accrual within its First Securities broker-dealer division in the second quarter of this year, despite the unit reporting lower half-yearly profits. But its bullishness was the exception and, overall, its new share-related remuneration scheme depressed bonuses, with bankers within its corporate and institutions division seeing a 59% fall in payouts.

Nordea has reduced the size of its bonus pot during the year, setting aside just €66m for performance-related salaries in Q3 against €70m in the same quarter in 2009. Danske Bank traders also saw a 12% reduction in bonuses in the first half of the year.

“Some organisations have implemented structures where employee compensation is distributed in various ways in order to prioritise long-term growth and reduce risk. So far this hasn’t, as far as we can make out, led to any significant new trends in terms of how or when people decide to move on,” says Bonde.

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