Where will the hiring happen for the biggest investment banks in 2018?
Now that the banking megaliths have reported their full year results for 2017 and given their guidance for the year ahead, we have a better idea of what's coming up. There are no big changes: for most, it's simply a question of continuing with the strategies they had in place last year. Below is our updated summary of where things stand for each bank now. At the very least, hiring is likely in the areas we've flagged. In reality, it's also likely to be broader than this: banks don't always divulge their intentions - just look at UBS's quiet recruitment for its fixed income sales business in 2017.
If you're hoping to get a job at Bank of America's thriving investment banking division this year, you might be out of luck. BofA CFO Paul Donofrio says there are no "weak spots" in the bank's IBD business and "all the teams are very strong." This doesn't sound like a hiring priority. Similarly, while other banks stressed their intention of ramping up technology spending in 2018, BofA said it's tech spend will be steady at around $2.7bn this year. CEO Brian Moynihan said the bank's technologists are becoming more efficient ("a little less cost per dollar for each programming unit,"), so there's no need to spend more than before.
If BofA isn't intending to do big hiring for its investment bank or its global markets business, it is busily adding people in its U.S. corporate bank. An extra 400 corporate bankers were hired for BofA's regional U.S. offices last year. As banks chase corporate clients with the intention of selling them hedging products and M&A and fundraising capabilities, corporate bankers are where it's at.
As we noted last week, Barclays hired no fewer than 40 managing directors to its investment bank last year, 20 of them in its markets business.
Barclays hasn't explicitly said so, but 2018 will surely be all about waiting for these new hires to achieve results. Even so, some additional recruitment is likely, particularly in the equities business, which is now being run by Stephen Dainton, the ex-Credit Suisse equities banker who joined in September. Last year, CEO Jes Staley said Barclays has been over-reliant on flow equity derivatives, whilst neglecting cash equities and that it intends to remedy this. Tim Throsby, CEO of the investment bank, made a presentation in the third quarter saying that Barclays intends to focus on electronic execution, macro, prime, equities and credit (pretty much everything in markets, then).
Staley wasn't explicit about the bank's hiring priorities during last week's conference call or in the accompanying presentation. However, he made it clear that Barclays still has a lot of work to do on its technology systems ("we're in the early stages"). Meanwhile, as Barclays reallocates capital to high-returning derivatives trading businesses, recruitment of complex product specialists seems a possibility.
Although little has been said publicly, headhunters say Barclays is hiring for its UK M&A business. This follows numerous hires last year, including Omar Faruqi as co-head of UK M&A from HSBC in October.
Citi hasn't said anything explicit on its 2018 hiring plans. It has, however, emphasized its intention to continue cutting costs. During the first quarter investor call, CFO John Gerspach said the bank is already achieving efficiency improvements in its institutional client group (ICG) and that it intends to "reengineer global functions" like compliance, finance and risk this year. The benefits of this re-engineering will be visible in 2019 and 2020, said Gerspach. Citi previously said that it wants to shave 70 basis points off expenses in the investment bank by moving staff to low cost locations.
Citi didn't say so, but it still has gaps to fill in its credit trading team after senior credit traders defected to Nomura.
Credit Suisse has already made some big cost savings across the bank, but it's not finished yet. During the call accompanying the bank's first quarter results, CFO David Mathers said the bank expects to incur an additional CHF550m in restructuring costs in 2018.
At its investor day in November, Credit Suisse said it's shifting jobs out of high cost locations (think London) to low cost "business delivery centres" (think Wroclaw), automating compliance jobs, and investing in artificial intelligence. During the first quarter call, CEO Tidjane Thiam said the bank already has, "85 robots in production, with an objective to have between 350 in active use by end 2019." It's not clear what these robots are doing, but Credit Suisse said last year that it expects to eliminate 45% of its compliance and control headcount this year, through “process re-engineering“ and "digitalization.”
Thiam said last year that Credit Suisse has finished hiring in equities and is now waiting to see results. During last week's call, he said the bank's hires in equities had been, "very well timed," and were "really paying off," but that cost discipline applies as much to equities as elsewhere in the business.
After making a loss in 2017, Deutsche doesn't have the money to make big growth investments in its corporate and investment bank in 2018. Indeed, CEO John Cryan told listeners to the bank's first quarter call that Deutsche is still at the stage of, "investing in fixing things," rather than, "investing in building things." Nonetheless, some recruiting is likely within this paradigm.
Cryan said Deutsche has already, "hired lots of people in our client data services area," as it seeks to rationalize the number of clients it work with. Now that this rationalization process is done, Cryan said the bank intends to automate the work those client data professionals have been doing. Like other banks, Deutsche is also seeking to automate compliance and control jobs, to move onto the cloud, and to reduce the number of operating systems it uses.
If you're a developer thinking of joining Deutsche Bank, Cryan suggested the working environment at the German bank has become more pleasant. Deutsche has introduced 'Fabric', a new platform which, "allows developers to deploy applications in minutes rather than months," said Cryan. (You can see Deutsche CTO Pat Healey discussing Fabric here).
Goldman Sachs has been very clear about its strategy for 2018. The bank said last year that it's chasing $5bn in additional revenues, of which $1bn are to come from fixed income currencies and commodities trading, $0.5bn are to come from equities trading, and $0.5bn are to come from the investment banking division.
During Goldman's recent investor call, CFO Marty Chavez said Goldman continues to make senior lateral hires for its FICC business and that it's particularly focused on hiring "engineers" to "redesign workflows" and build "digital channels." CEO Lloyd Blankfein added in February that Goldman is focused on, “best execution, content and analytics," and that the firm is particularly focused on building its electronic execution and prime financing services. Many of Goldman's hires in 2018 are likely to be technologists: Blankfein said 70% of Goldman's electronic trading hires last year were engineers. In February 2018, Goldman already hired Reinaldo Aguiar, a former senior software engineer at Google to work on the Marquee product, which allows clients to access its risk and pricing system directly.
Goldman isn't just chasing engineers though, it's also chasing relationships. As we've reported before, the firm wants to recruit local relationship bankers to bring in corporate clients across America. Chavez said the bank has hired,"senior managers" to cover "mid-sized corporates" in Atlanta, Dallas, Toronto, Seattle and elsewhere.
J.P. Morgan didn't say much about its hiring intentions for the corporate and investment bank during yesterday's investor day, except that it intends to make, "senior banker hires in targeted areas." Jamie Dimon subsequently suggested that the bank is choosy and doesn't just want to add a "bunch of deadhead bankers” for the sake of it.
Like Bank of America and Goldman Sachs, J.P. Morgan is big on U.S. corporate relationships right now. "I think about the commercial bank is the absolute nexus of everything we do. It's delivering the whole company to our clients in a way that very few other people can do," declared CFO Marianne Lake during the first quarter investor call.
As we noted yesterday, J.P. Morgan is a massive spender on technology (nearly $11bn annually). It intends to spend an extra $500m in the corporate and investment bank this year, much of which can be expected to go on technology initiatives.
If Morgan Stanley intends to recruit heavily in 2018, it's being pretty tight lipped about it. Instead, the bank seems to be pursuing a strategy of holding things steady. CFO Jonathan Pruzan said the bank has finished its, "Project Streamline," cost cutting initiative and extracted $1bn of costs through, among things, leveraging "centers of excellence," converting consultants into employees, and implementing technology-led solutions.
If Morgan Stanley expands anywhere, it may be in Asia, where CEO James Gorman said there are opportunities for organic growth in the investment bank.
Lastly, UBS also has big plans for Asia. Sergio Ermotti, chief executive of the Swiss bank, says the investment bank "remains focused" on achieving revenue growth in the Chinese and U.S. markets.
UBS plans to continue spending just over 10% of its revenues on technology, said Ermotti, adding that money which was recently spent on regulation and litigation is likely to be diverted to tech spending in future.
Ermotti said UBS also intends to make the most of its traditional strength in equities sales and trading, with a focus on its equity research and execution capabilities.
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