Investment banks haven’t been preaching job security lately even after showing tens of thousands of employees the door over the past 18 months. Most institutions are still talking about paring costs.
Yet, there is one unlikely source of stability in the City – Lehman Brothers. Nearly five years since its collapse on the eve of the global financial crisis, the investment bank still has around 500 employees, and half as many seconded from its administrator PwC. Many of them may well stay employed for another five years to finish winding down the firm.
“Immediately after the bankruptcy, the mood was understandably very low, a large number of people lost their jobs and those that remained felt that the rug had been pulled from under them,” said Jonathan Turner, a partner at PwC and chief operating officer on the Lehman administration. “Since then, we’ve tried to instil a positive mindset in the Lehman staff, create a sense of excitement about the project and show them that having the bank on their CV still makes them a marketable professional in the long-term.”
Aside from five legal positions, there are no plans to increase headcount at Lehman Brothers this year. After the first interim dividend payment of £7bn to 1,582 unsecured creditors last November, headcount was slowly pared back. Slowly, however, is the operative word, and any redundancies will be on a voluntary basis in the near-term, said Turner.
The front office in Lehman’s European operation is, of course, long gone – the equities business went to Nomura (and then pastures new) and the fixed income bankers were forced back on to the job market. Instead, the bank is now staffed with accountants, finance professionals, treasury experts and technologists. Of these, 60% are full-time, 25% are on fixed-term contracts and 15% are contractors.
Current Lehmanites in the City will eventually be let go, but not imminently and Turner is keen to point to a culture of openness and inclusiveness, as well the career benefits of staying with the bank. Tony Lomas, the lead administrator at PwC, presents a quarterly ‘town hall’ meeting to all employees on the bank’s priorities for the coming quarter and ‘getting to know’ sessions (monthly presentations by different business areas) have been going for the past three years.
There are still 27 managing directors at the firm, largely old Lehman Brothers employees, and they have been the ones carrying out assessments that have given 168 staff promotions since 2008.
“The process for employee advancement is exactly the same as it was pre-administration – namely very rigorous,” said Turner. “Any candidate going for promotion has to appear before a panel of MDs and the COO approves the advancement based on their recommendations.”
The technology team at Lehman is proportionately large, at 10-15% of headcount, and after spending time unravelling the banks’ legacy platforms, the team has spent time developing a valuations system and the technology unique to the administration, said Turner.
If all this sounds tempting, the bad news is that Lehman is unlikely to be recruiting much any time soon. The attrition rate remains in single figures, said Turner, and if anyone leaves, the first port of call is to look internally for a replacement or to share the individual’s workload among existing staff.
In the current climate, there are few financial services professional who can boast ten years of uninterrupted employment. Lehman Brothers staff may count themselves lucky.