As the U.S. election countdown begins, some bank recruiters are starting to get a little excited. If Hillary Clinton is elected president, the expectation is that banks will hire. They may even do so in reasonably large numbers, in the front office.
“Teams are lean. If Hillary’s elected banks will hire,” predicts Michael Karp at search firm Options Group.
“It won’t be immediate – you’re looking at next year.” Jeanne Branthover, partner at DHR’s Global Financial Services practice, agrees: “A lot of banks have held off hiring because of the election. Once it’s over, we’re expecting a green light for hires – some banks are pretty aggressive about wanting to add to teams in 2017 and they’re going to be a lot more confident about doing that if markets rise because a known-quantity like Hillary is elected.”
The pent up hiring demand comes after most banks had a good third quarter – especially in fixed income trading where headcount has been cut most in recent years. Research firm Coalition suggests global fixed income headcount fell by 7,900 people, or 31% between the first half of 2011 and the first half of 2016 as revenues fell by a third. As revenues recover – especially in areas like rates, banks may find themselves too lean for comfort.
“Third quarter results were pretty good and people are already talking optimistically about the fourth quarter,” says the head of one London search firm who also operates in the U.S. “We’ve already had signs of a turnaround in fixed income and if Hillary wins, people are going to be optimistic.”
It helps that banks like Deutsche are predicting a U.S. rate hike in December, which should create trading opportunities for banks’ macro trading divisions.
Needless to say, a Trump victory isn’t viewed with equal relish by recruiters. As an unknown entity, Trump will unleash uncertainty. This might be good for volatility traders, but it won’t be so good for all the M&A and capital markets bankers who rely upon stability to get deals done. If Trump’s elected, the U.S. rate hike may also be postponed.
Some headhunters are bearish irrespective of the outcome of today’s vote. “It’s a tough environment out there,” says Zaheer Ebrahim, managing director of search firm Kennedy Associates. “Banking revenues are still a lot lower than they used to be and there’s going to be more downsizing.” He predicts that hedge funds are also going to make cuts before this year’s out: “Assets under management are down so substantially that hedge funds can’t afford all their portfolio managers. We’re expecting a 10% to 15% cut in portfolio managers before 2017.”