This is a difficult time to be an expensive senior banker. With salaries rising, banks are looking long and hard at their bloated ranks of managing directors and deciding they need to take action. Goldman Sachs is only promoting MDs every two years. Morgan Stanley, Barclays and Nomura have all been disproportionately cutting their most experienced staff.
If you lose your job in the City and you’re aged 50+, you may struggle to find a new one. We spoke to one 55 year old equity researcher who’s been out of the market for two years and who told he’s applied for, “hundreds” of jobs. “I’ve thought about doing just about everything you can imagine since I left banking,” he said, speaking on condition of anonymity. “Big banks just aren’t hiring senior staff and smaller firms are keen to hire but they don’t have any money. I’ve had countless interviews.”
Salaries for investment bankers in London are likely to rise even further in future. UBS has already hiked salaries for some of its bankers ahead of the European Union’s bonus cap and other banks are likely to follow. As a result, more banks are likely to try coping with less experienced cheaper staff who weigh less heavily on fixed costs. The banking industry is dumbing down in the process, argued the dumped equity researcher we spoke to. “The bulge brackets are dumbing down and publishing bland research notes now,” he said. “They’ve discovered that if they all do it at once, it doesn’t really affect their competitive position.”
Last October, Michael Burdin, a former Bank of America ‘FX manager’ killed himself after being put under ‘serious pressure to resign.’ Bank of America didn’t return a call asking it to comment on Burdin’s death, but the unemployed equity researcher we spoke to said he’d been pressured to quit too – albeit not by BofA. “As long as I signed a compromise agreement accepting that I wouldn’t sue for age discrimination and would go quietly, I was offered accelerated vesting of my deferred stock,” he said. “My severance pay was tiny by comparison.”
It’s not all awful, though. Charles Ferguson, a lawyer at Ferguson Solicitors, said bankers whose stock vests immediately following redundancy are among the lucky ones – it’s more common for banks to insist that deferred stock continues to vest on the established vesting schedule when they make people redundant. And Linda Jackson, managing director of 10Eighty, a company which helps laid off bankers find new jobs, said she sees comparatively few 50 year old bankers and that many of them are just glad to be out of it anyway. How old are the bankers Jackson sees then? “Most are in their late 40s,” she said, not entirely reassuringly.