Will you still be working in banking, for the firm you’re with, this time next year? Will you lose your job? If you do, will you be able to find a replacement (in banking)? What about if you decide to switch jobs voluntarily?
Finance recruiters in the City of London say the state of play in the banking jobs market today can be summed up by three rules. 1) If your job’s in a risky area where cuts were always likely later in the year, those cuts will now be brought forward (probably to September). 2) If the job you’re looking for is strategically important OR was advertised before the EU referendum, you’re in luck. 3) If the job you aspire to falls into any other category, forget it.
“Hires that are already in process and that need to be done will still happen,” says Oliver Rolfe, founder of equities-focused London recruitment firm the Spartan Partnership. “But expansion plans are on hold, and the cuts that were coming are being brought forward.”
1. Early cuts to business areas already at risk
Even before the Brexit vote, European banks had cost reduction programs outstanding. Credit Suisse, for example, aims to achieve CHF1.6bn in savings this year and CHF4.3bn in total by the end of 2018. By the same date, Deutsche Bank aims to make gross savings of €3.8bn and net savings of €1.5-€2.5bn. Barclays is aiming to cut costs from £17bn last year, to £12.8bn this year. Only UBS, where Andrea Orcel says there will be no more job cuts unless conditions worsen, looks safe – but even here, costs will need to be taken out in the form of lower pay.
The areas most vulnerable to cost cutting are the usual targets.”This is a business that’s been in decline for years,” says one London fixed income sales and trading headhunter. “It’s got nothing to do with Brexit – from the mid-2000s onward you had massive headcount growth in fixed income trading, and now it’s all shrinking back.” He says banks like Barclays which used to employ thousands of people across commodities, rates and FX in London are combining roles and relying more heavily on electronic trading systems: “Now, it’s all about employing fewer, better, people and relying more heavily on the electronic platform. The whole business is a shadow of its former self.”
If fixed income jobs were at risk before June 23, M&A and ECM jobs have moved into the line of fire because of the vote. UK IPOs were down 75% by value year-on-year in the uncertainty of the second quarter, which surely doesn’t augur well for London ECM jobs. M&A deals are being cancelled in the post-Brexit opacity and recruiters say M&A bankers are already getting twitchy. “We’ve started to get an awful lot of CVs from US banks,” says David Archer, director at recruitment firm Circle Square. “Morale is low – people are working harder and they’re fearful about losing their jobs.”
2. Strategically important roles and jobs already advertised are still being filled
None of the recruiters we spoke to said jobs had been pulled since Brexit: it’s “business as usual.”
“For a moment, I thought we might as well shut up shop after Brexit,” says Simon Head, head of the financial services practice at Pure Recruitment in London. “But there’s been no evidence of the referendum killing hiring. Nothing I’m working on has been cancelled and we’re seeing no new hiring freezes.”
Echoing recruiters like Selby Jennings, Head says strategically important roles like risk and compliance, which are on the frontline of Brexit-related adaptations, have seen an uptick in hiring in the past few weeks. Elsewhere, gaps are still being filled – albeit internally if possible. And some, modest, strategic hires are being made in the front office to take advantage of new opportunities Citi, for example, has been recruiting for its “strategic equity solutions” desk to manage increased demand from investors who don’t want to sell equities into a soft market, but to hedge their existing exposure.
3. Ambitious expansion plans are quietly on hold
What about banks’ expansion plans? What about Citi’s push into other areas of European equities? Or Deutsche’s plan to add 2,000 people across its equity capital markets, M&A, credit solutions, prime brokerage and control functions?
Ostensibly, banks have come out fighting. UBS says it will still be hiring in the U.S. Last week, Credit Suisse insisted that its hiring plans will continue as usual and Alasdair Warren, head of Deutsche’s EMEA corporate and investment bank, insinuated that Deutsche will hire as it remedies years of “under-investment in people.”
On the ground in London, however, recruiters say conditions look a little bit different. “It’s more about make do and mend than going for growth,” says one M&A recruiter. – “Plans have been shelved. And that’s unlikely to change until after the uncertainty created by the U.S. election.”
By way of example, he points to J.P. Morgan. In December last year, Daniel Pinto, head of J.P. Morgan’s investment bank, declared his intention of recruiting “dozens” of senior investment bankers as part of a “very aggressive” hiring plan as M&A soared. In the event, J.P. Morgan has hired Luca Ferrari as head of EMEA M&A and that’s about it. “I can’t think of anyone else they’ve hired,” says one M&A headhunter. “But I can think of plenty who’ve left,” he adds, pointing to people like Markus Boser, J.P. Morgan’s former head of technology M&A who left to become CFO of AUTO 1 in Berlin in April, or Piers Davison, who left J.P. Morgan’s FIG team for Citi around the same time.