If your London banking job is likely to move to the European Union because of Brexit and you haven't been offered a relocation package already, you may be out of luck. After a difficult first quarter, headhunters say banks are reining-in their generosity, particularly when it comes to moving junior and mid-ranking staff.
"Six months ago, you had a lot of senior people being offered temporary accommodation, flights home, and school places," says one fixed income headhunter in Frankfurt, speaking off the record. "Now, people are being given £5k and wished good luck."
Diminishing relocation packages are partly a reflection of seniority and partly a reflection of function. Top performers in the front office are predictably given more assistance with moving than VPs in the middle office. But smaller packages are also a reflection of banks' sudden penury - the harsh start to the year means most can no longer afford to be as solicitous of staff welfare as they might like.
"Nice transfer packages are getting rarer and rarer," says the Frankfurt headhunter, who also works in London. "I've seen VPs with children offered €7k and a single month in a temporary apartment, but no more. Banks can't afford to play the nanny state when revenues are falling off a cliff."
Brexit is costing banks big money. Bank of America said in February that it has spent $400m preparing its new offices in Paris, Ireland and elsewhere. Deutsche Bank is paying Garth Ritchie, the head of its investment bank an extra €250k a month for responsibilities relating to Brexit. Even Macquarie, whose London operations are diminutive, spent $8m last year on Brexit preparations according to its most recent results.
With Brexit kicked into the long grass until Halloween, it might be presumed that banks aren't rushing to shift staff into Europe. However, this doesn't seem to be so. Bank of America said in February that there's no going back on its Brexit spending and Goldman Sachs has been boasting on social media about the imminence of its move into its new Frankfurt office. Staff who signed relocation packages in the first quarter are now being shunted out of London. "Nothing has halted, and if anything it's spread up," the headhunter says. "- Twenty to thirty people a week are arriving here from banks in London as internal transfers are executed, and a lot more are planned between July and September."
Another London headhunter, also speaking off the record, confirms that relocation packages are shrinking, as is the pay on offer in new European locations. "To start with, banks were offering to match London salaries and giving some reassurance on bonuses for next year. Now they're correcting to local salaries, saying nothing about bonuses and cutting back on relocation pay."
Hardest hit are the mid-ranking staff with families in London. They now face either carrying the cost to relocate their families, or paying for two houses - one in London and one in Europe. "The VPs and directors are hardest hit," says the Frankfurt headhunter. "They can't quite pull this off financially and they now face having their bonuses rebased to local market levels next year."
Some banks are offering to help cover the cost of commuting between London and Europe for between six months and two years. UBS, for example, is offering to compensate for commuting costs until September 2019. Bank of America is offering staff $25k to cover the cost of commuting between the EU and London - but only until the end of this school year. Morgan Stanley will generously compensate for some commuting costs until 2021.
However, commuting between London and Europe carries its own dangers. James O’Shea, the chief auditor at MUFG revealed recently how he had a breakdown after moving his family to Ireland and working long hours in London during the week. "You're going to have a lot of mental health problems, marital breakdowns," says the headhunter, bleakly. "Most people who've moved to Frankfurt are now desperate to interview in London."
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