It had an air of inevitability: ever since UK M&A activity plummeted to a five-year low in the first quarter of this year, M&A bankers’ days have looked numbered. Little surprise, therefore, that both Goldman and Citigroup are said to be targeting M&A teams in their latest round of cuts.
Banks in the headlines aren’t the only ones wielding the axe. UBS is said to have made deep cuts to its UK M&A operation. Morgan Stanley is also understood to have eliminated roles. In April, Merrill Lynch extricated Charles Roast, “one of the UK’s most promising M&A bankers”, only 18 months after soliciting his services from Deutsche.
But while senior bankers like Roast are getting roasted, anecdotal evidence indicates it’s the marzipan layer of VPs and senior associates that’s being truly torched. “Very few analysts and junior associates have been let go,” says a VP at one US house:
“Cuts have mostly been at VP level and then it’s people who’ve come in as lateral hires rather than born and bred types who are on the way out.”
Emerging markets salvation?
Fortunately, emerging banks are hiring in M&A.
Renaissance Capital is looking for directors, vice presidents, associates and senior analysts, to be based in Russia, Kazakhstan, the Ukraine and Nigeria. Andrea Williams of JBS Associates says they’ve been showered with “hundreds” of applications.
“At this stage they would rather interview Russian than non-Russian speakers. But because of deal pipeline, non-Russian speakers are also being considered,” she says.
Standard Chartered has also signalled its intention to hire between 25 and 50 M&A bankers this year (FT) and is interested in senior candidates let go in New York and London.
Banks like Renaissance will pay one-year guarantees to get candidates on board. A Russian specialist at one London search firm says packages of $600k-700k aren’t unheard of for third-year associates who are ‘pumped up’ to VP level.
Jobs in the East may prove short lived, however. Russian M&A declined 30% in the first quarter of this year (RBC News).