Burnt by their generosity with guaranteed bonuses in 2008, banks are now virtually refusing to pay them at all. According to headhunters, this is contributing to the hiatus in hiring.
"After 2008, when already small bonus pools were depleted by guarantees, banks are paranoid about offering guaranteed bonuses to new hires," says one headhunter. "It's making it difficult to bring in new talent."
Banks like RBC Capital markets are rumoured not to be paying guarantees at all (something unconfirmed by RBC). However, ICAP, the inter-dealer broker which is building its equity sales presence, is understood to be offering guarantees.
The absence of guarantees is making people reluctant to leave the security of an existing position for something new. But some bankers appear willing to take the risk.
"I am dealing with a very senior ex-MD from a US bank," says the head of a derivatives search firm. "He resigned last year because he wanted a new challenge and is now looking for a new position without a guarantee. He is getting interviews: in a normal market he would be a high-spend hire. Without the guarantee you're looking at an upfront cost of only around 200k in base salary."
Another search consultant says banks' will suddenly whip out guarantees if desirable candidates receive a competing offer. "Banks aren't volunteering guarantees in this market, but I've been in a situation where a candidate received another offer from elsewhere and the bank suddenly offered a guarantee to match it," he says.