It's happened again: buoyed by a few good quarters, banks have decided to do some serious hiring. And then, predictably, the business has evaporated.
The focus this time has been high yield. Year to date, high yield issuance globally is up 50%, according to data provider Dealogic. In Europe, it's up 95%. This has prompted a rush of hiring. Headhunters say the high yield recruitment market in Europe has been so hot that some senior bankers have received multiple job offers and been bid back, or turned to join other firms while on gardening leave.
Speaking on condition of anonymity, headhunters say banks recruiting in high yield now include Knight Capital, HSBC, Lloyds, SocGen, Citi, Jefferies, Mizuho and BNP Paribas. HSBC, for example, has recruited Jack Czarnota, who left BNP Paribas in April. Czarnota's name was previously associated with SocGen and Lloyds, said headhunters.
HSBC is also said to have hired Andrew McMillan, who left RBS in June. George Spierings also left RBS in June and is said to be joining BNP Paribas. Meanwhile, Jefferies has hired Eoghan O'Neill from Knight Capital for high yield sales, and is said by headhunters to have picked up Dale Hogan, who left BNP Paribas in May for high yield trading, along with others from Knight Capital and elsewhere.
Banks' appetite for high yield hiring has been compounded by hiring at hedge funds and brokerage houses. Hedge fund Moore Capital has reportedly hired Anthony Wainer, the former head of high yield credit trading for EMEA at Morgan Stanley. Cantor Fitzgerald has hired a head of high yield from Gleacher. Gottex, a Swiss brokerage firm, announced it was opening a high yield-focused business in London earlier this year.
The rush of hiring is creating a musical-chairs effect as banks seek to fill the seats that are left empty, said headhunters. BNP Paribas, for example, is expected to replace Czarnota along with others. Robert Lepone, head of distressed and leveraged credit trading for Europe, has also left BNP Paribas, according to headhunters. A call to Lepone's desk went unanswered, but BNP Paribas did not confirm his exit.
"Markets have definitely picked up," said Russell Clarke, founding partner of Figtree Search. "The high yield and leveraged markets are both doing well - there's activity across origination, leveraged loans, and distressed debt."
Unfortunately, however, the rush of revenues in high yield may not prove sustainable - banks' recent hiring could turn out to have been for nothing. Back in February, Bill Gross of Pimco said high yield was in the grip of 'irrational exuberance'. According to JPMorgan, high yield bond issuance plunged 75% in June compared with May as investors worried about the end of quantitative easing and rising interest rates.
One headhunter said banks have probably overdone it - again. "The irony is that banks have hired a lot of people in high yield and have been bidding aggressively for them this year. But it takes three months for these guys to serve their notice periods and by the time they actually arrive, it's looks like banks will have missed the boat."