To temper the new-found optimism about front office investment banking hiring picking up once again in the City, it’s worth pointing to new figures from research firm Coalition – headcount is still down by 10,000 since 2011, and Europe continues to be the hardest hit by any redundancies.
Headcount for revenue-generating positions is down across fixed income, currencies and commodities, equities, and origination and advisory by between 6-9% compared with the first half of 2012, with 54,200 people now employed in these roles, according to Coalition’s research. Europe, which has been hit by a 21% fall in employment since 2010, is still the main target for any cuts.
So, is there any real reason to celebrate, or are recruiters just talking up the market? Well, yes, but don’t splash out on the champagne just yet. Let’s not forget the banks like Morgan Stanley, Citigroup and HSBC continued to roll out redundancy announcements into 2013. And yet, compared with the end of 2012, headcount has increased – 53,469 people were employed in front office roles at the end of last year, meaning that banks have taken on 730 people in the first half of 2013, or a 1.4% increase, according to Coalition’s figures.
However, all this firing hasn’t actually made much of a difference to banks’ bottom line. As banking commentator William Wright points out, headcount may have shrunk overall by 10% since 2009 and pay by 15%, yet rising costs in IT, communications, office space and travel has kept costs stubbornly high.
Even worse, if you’re on the edge of a marginal business that a bank has cut to the bone, don’t expect employment options to pick up soon. Headcount reductions in areas where banks don’t have a particular strength has resulted in an overall pick up in productivity per head in revenue generation positions across FICC, equities and advisory functions. Banks can see the benefits of getting by with less.