In 2000 Bear Stearns built up massively in Europe just as the cycle was about to turn. Sound familiar?
In January this year, Financial News claimed Bear Stearns had big plans to triple the number of staff it has in London, hiring as many as 2,000 people in the process. The US bank has subsequently revealed plans to move to a new, larger headquarters in Canary Wharf and has hired for everything from credit to prime broking and M&A. It’s also opened an office in Paris, and has another in the pipeline in Frankfurt.
But is now the time to be engaged in all this hiring and office-opening activity? The Bear brand’s looking more than a little lacklustre following its association with the crisis in two of its US sub-prime mortgage-focused hedge funds. Its co-president Warren Spector was ousted over the weekend, its stock has fallen around 20% since June (says the FT) and talk of a takeover is in the air.
Combine this with the bank’s failed history of European expansion, and anyone joining now may be justifiably dubious. After it hired vigorously in M&A in 2000, more than half Bear’s team was shown the door between 2001 and 2003. One headhunter (who’s worked with the bank) predicts the same will happen again: “Is it really committed to Europe? I don’t think so; it will hire and then fire. But other banks will do the same.”
To induce people to join it now, headhunters say Bear Stearns will need to offer some tasty pay packages. Fortunately, it seems the bank isn’t averse to this. “Frankly, I don’t think they’ll have trouble hiring,” says the headhunter. “Their set-up is a bit like Lehman used to be – it’s low cost and high commission. They’re a lean, mean bunch of guys and they pay well.”
“At the end of the day, Bear Stearns can be hard to hire for in Europe because they’re a bit of an also-ran,” says another headhunter who’s dabbled in recruiting for the bank in the past. “But at this stage in the cycle they might get people who want to get locked in.”