Want to know what's going to happen next year? Here's the outlook from seven senior executives at financial services search firms.
Jonathan Baines, chairman Whitehead Mann
"The financial services industry is going through a generational change. Most organisations, however well or badly they have done, are now in the process of reviewing their business models and questioning which areas they should and shouldn't be in. Until this fundamental review is out of the way and the industry has been through the necessary adjustment, there will be little significant hiring. Only once this has been completed will we know what the future holds, and with the regulatory landscape still unclear this is most unlikely before the second or third quarter of 2009."
Shaun Springer, chief executive officer, Napier Scott
"Areas of banking which suffered in 2008 will suffer further in 2009, and areas which actively hired in the past 12 months will continue to be active next year. Businesses which have suffered the most, like leveraged finance and securitization, will not come back. Other areas, such as the Middle Eastern private equity and global private banking will continue to be an area of focus. Once banking regulation has been clarified, I would also expect a lot more hiring in operations and risk management."
Brian Hamill, chairman, Redgrave Partners
"Having faced unprecedented market conditions throughout much of 2008, I believe that 2009 will be an extremely difficult year. Capital markets and M&A are areas which are likely to remain very depressed, with the expectation that widespread redundancies are more likely than any notable hiring plans. In terms of other areas, both hedge funds and private equity firms face difficulties in terms of both redemptions and problem portfolio companies, which are likely to lead to staff being shed. A few bright spots are evident, with the possible exception of selective hiring by private wealth managers and advisory boutiques. One area which is likely to benefit from the market turmoil is restructuring where there is actually a dearth of talent."
Michael Karp, chief executive, Options Group
"The first two quarters of 2009 will be pretty similar to the last quarter of 2008, when there was not much hiring activity. The whole globe is in a recession and this is not going to change quickly. Overall, I expect hiring to be even less in 2009 - banks will be cautious about adding headcount when they are also laying off thousands of people. However, they will always remain interested in good talent. Areas which might be active include rates, FX and commodities. Geographically, I think the Middle East should be active. Equities hiring also remains active within the UK."
Tim Sheffield, chief executive, Sheffield Haworth
"Overall, 2009 will most likely be a much worse year for the UK financial services executive search industry. The first quarter of 2009 will continue to see further redundancies and there will be very few new hires until the dust settles. Most large financial services organizations are still significantly over-staffed to deal with the expected lack of business in 2009. Expect further cuts in the New Year. What little hiring there is will primarily be dominated by the more regional or specialist firms who see this as an opportunity to pick up talent at affordable prices. In one or two exceptional cases, you will see large investment banks gradually build up their global equities and corporate finance business. This is based on a longer term build-out over two to three years. It is impossible to predict beyond the first quarter but we do hope that towards the autumn, there will be more positive signs appearing. Areas where we see continued hiring include equity research and sales, restructuring and M&A advisory, strategy, private banking and asset management. Senior bankers who have strong client relationships will continue to receive calls. "
Dee Symons, co-head of European financial services, Russell Reynolds
"2009 is going to be a much tougher than 2008. Headcount will continue to shrink. Banks are heading back to 2003 levels in terms of revenues and bodies, so there is still a way to go and more redundancies are expected in Q1.
Recruitment will be largely very senior level strategic hiring and opportunistic upgrading to take advantage of the dislocation. Certain areas will, however, continue to grow (some of this will be dependent on the needs of the bank). FIG and restructuring are two key areas in which we expect growth in banking. In markets, the traditional flow areas of rates, fx are likely to grow. Risk and other group functions (finance, compliance etc.) will also remain requirements."
Lee Thacker, partner, Silvermine Partners
"Headcount cuts are gaining momentum. Management are cognisant of a massive contraction in activity levels, leading to planned reductions of 30-50% of front office headcount, especially in those firms where a government re-capitalisation is in place.
We expect headcount cuts to continue across all lending, capital markets and trading and sales product areas in the first quarter of 2009. Commercial banks operating on a March bonus round can be expected to follow US banks in implementing deeper cuts as the bonus payout date approaches.
The fundamental lack of confidence in new business levels will see some radical cuts through 2009. Clients are not yet saying they are able to plan for any turnaround or restart of business levels and remain supremely cautious on adding any new headcount.
The most concerning trend to emerge in December has been the wholesale withdrawal by certain firms from areas like securitization, leveraged finance, and hybrid capital.
We expect some improvement in the hedge funds sector as 2009 progresses and corporate defaults in the UK and Europe accelerate. But staffing demand remains thin.
We expect broker dealers to continue to pick up sales and trading staff at low cost levels. Investment banking is expected to staff-up on corporate restructuring and legal skills through 2009. New boutique start-ups in advisory are also expected to add staff, as are private equity funds which need debt-aware professionals.
With some optimism, we are hopeful of seeing some stabilisation of business levels due to refinancing needs during the second and third quarters. At this point, staffing levels may be able to stabilise."