| Banks jump to hire new staff. Only experienced staffers need apply |
LAST YEAR WAS bad news for bankers in Europe, even in the buoyant area of fixed income. Recruiters estimate that 10% of the fixed-income workforce were laid off and still more took pay cuts to keep their jobs. But debt market revenues have been a nice meal ticket this year and the good news is that after months of retrenchment, managers in some banks have a mandate to expand and hire again or will have soon.
The bad news is that they are looking for people with specific skills to help build out businesses and are not likely to offer big pay packages.
The banks that are hiring at the moment are not established market leaders but those still seeking to build out their European debt platforms. Some have been on a hiring drive for a while.
Niall Cameron, global head of credit markets at ABN Amro, has been increasing his team since the end of last year and is still seeking staff. The bank has been hiring in every area, from sterling credit and leveraged finance to government bond trading and asset-backed securities. It is about to announce some new hires in its north American debt business, the focus of the next expansion drive. Cameron says he will also build out the structured credit derivatives business in Europe into the second half of the year and plans include expansion of the European ABS team.
Rob Jolliffe, head of primary markets origination at Royal Bank of Scotland, has had a mandate to hire and increase the bank’s European presence since he was recruited from Goldman Sachs last July. Last year, RBS planned to increase the headcount in its financial markets division by 25%; this year the plans are even more ambitious.
Other banks have shown their hands more recently. SG announced in June that it wanted to recruit 150 staff in fixed income and equity derivatives. Thirty will be new European fixed-income hires to push SG up the league tables in capital markets, structured finance and derivatives. “We are looking for someone with three to four years’ experience, or graduates,” says Grégoire Varenne, global head of interest rate products at SG. The bank began hiring at the beginning of the year and are about half way through this drive. Varenne says the trading side is pretty well in place, but more sales staff are needed.
Banc of America Securities has also stepped up its efforts to expand its European debt-capital-raising and risk-management businesses since January, albeit from a tiny base. “We are slightly up in headcount on last year, even though the emerging markets business has been downsized,” says Arrington Mixon, head of debt for Europe, Middle East and Africa for Banc of America Securities. In March, the bank hired JC Perrig, a European origination head at CSFB. “It’s great to have JC Perrig and strong originators, but we also need to continue to build our capability in distribution, trading, sales and research. With regard to this, we are looking for talent with European experience,” says Mixon.
The bank has been gradually adding to all these areas since the start of the year, but Mixon says it is now looking at building out its trading platform in particular. “Bank of America should be one of the best traders in Europe of US names,” she says. The bank will be expanding in leveraged finance next year and in the financial institutions group.
The other bank whose new European fixed-income management plans to expand its platform is HSBC. It already includes the high-profile hire of John Studzinski, who was deputy chairman at Morgan Stanley until March. With Stuart Gulliver, who has come from Hong Kong to run global markets, he will co-head the global corporate, investment banking and markets business, with combined responsibility for debt trading, origination and sales.
Now headhunters are waiting for the bank to start hiring, particularly in distribution. However, HSBC also has a reputation for growing slowly and promoting internally, so external recruitment will not be on the scale of ABN Amro or RBS. “HSBC are looking to hire in very strategic key roles; they are not going to be taking on 20 people,” says a headhunter.
Traditionally, the hiring season is pretty much over by this time of year. Banks tend to be reluctant to hire in the second half because they are unwilling to recruit someone from a competitor who has to complete three months’ gardening leave and then pay them a full 2003 bonus for three months’ work or less that year.
This is not so much the case this year. SG’s Varenne is expecting that half a dozen fixed income recruits will join the bank in September and that a few more candidates will join the bank before the end of the year. “The problem is that if we hire someone now, they will not be on board until late in Q4,” says Mixon at Banc of America Securities. “But if we wait until next year’s bonus cycle is complete, we are probably looking at early second quarter.” So the bank will carry on recruiting this year and will soon start interviewing for next year’s hires. “While you will continue to see us making select strategic hires this year, we are also planning where we want to be in 2004 and finding the people who will help us achieve our goals,” says Mixon.
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Varen, Cameron and Mixon: seriously seekingpeople with skills, experience and an entrepreneurial spirit |
Looking for entrepreneurs For those who may be tempted to make the move, the main incentive that all of these banks are pitching to candidates is the chance to shape a growing business. Cameron at ABN Amro says he is looking out for people who want to be entrepreneurial, who are “business people, not just bankers”. Mixon at Banc of America says the bank entices people away from the more established fixed-income houses in Europe with the promise of more influence and that there are not going to be several vice-presidents lining up patiently for one available director slot.
She adds that this also applies further up the food chain. “The types of people we talk to are very senior but thinking ‘I don’t know where I’m going to go next. I am stuck in a product silo or mired in red tape and I can’t drive things the way I want to drive them, and the way my experience tells me the market wants to move.'” She mentions JC Perrig, who at CSFB was co-head of the bank’s European corporate business for cash and derivatives. He is now head of EMEA debt capital markets at Banc of America. “JC was a superstar at CSFB, but he was co-head of corporates and derivatives, whereas here he can run the entire team and sits on the bank’s operating committee in Europe,” Mixon says.
In contrast, established debt houses in Europe, particularly US banks, are not necessarily offering exciting job prospects right now. A survey by recruitment firm Napier Scott in June reported a continued reduction in debt capital markets headcount at many of the banks with the biggest teams, particularly on the less structured side of the business and areas of country coverage.
Many larger banks are focused on moving people internally. Of the external hiring that is going on, a lot is just replacing existing staff from the vast array of well-qualified people who are available on the street or are unhappy where they are. “Most banks have just been upgrading the staff they have. Fifty per cent of new hirings have been upgrades this year,” says Shaun Springer, CEO of Napier Scott.
Some banks, for example Lehman Brothers and UBS, are expanding, but are in no hurry and are only taking on a few individuals. Lehman has lifted its recruitment freeze and has recently recruited Martin Cross, previously head of UK gilts trading at CSFB. Headhunters say UBS is looking for hedge-fund sales coverage.
A lot of banks are waiting to see what the prospects for their debt businesses are, particularly after abrupt increases in bond yields in the summer. Commenting on UBS’s Q2 results, CEO Peter Wuffli was already predicting a cool-off in fixed-income revenues in the second half of the year. “There is a lot of talk from banks about people recruiting in fixed income but a lot of banks are not putting this into practice. They are waiting for a recovery in the market as the bull run in the debt markets is certainly not guaranteed,” says Yann Gindre, managing director at recruitment specialist Truffert & Co.
But the fact that the debt markets have been so busy for most of the year has already led to staffing shortages at some US banks, according to Gindre. “The US banks have over-recruited and over-fired,” he says.
The dramatic cuts that some banks have made to their fixed-income cost bases has resulted in a a churn in senior management and many staff heading elsewhere.
CSFB is the most obvious example. Since the departure of John Walsh in the US and the resulting reshuffle of senior management in April, in Europe alone the bank has lost the aforementioned Martin Cross; Stuart Bell, its European head of corporate syndicate; Matt Carter, head of syndicate for financial institutions and John Zarfiriou, who ran European fixed-income coverage and origination. And those are just the senior debt bankers. “CSFB had a huge cost base so they had to change,” says one headhunter. “But a lot of people have had their contracts reviewed. There has been lots of tension and they have lost lots of people. People at CSFB are always happy to take a call from us.”
The shake out at CSFB is mostly finished now, but a European head of debt capital markets at another US bank confirms that there is a temptation for staff to jump ship. “One thing that takes a lot of my time is making sure the team are happy and don’t feel the need to head for the door,” he says.
Of course there’s one particular commodity that generally keeps bankers happy. Yet banks are more careful about how they spoon it out and more scientific in measuring what they will get in return. Banks are looking for specific skill sets that will directly bolster the bottom line. “It’s no longer a case of ‘we think he’s strong so we’ll hire him’, which happened in the boom times at some banks,” says Mixon. “When we hire someone we have to be specific that they will have either a strong impact on important client relationships or produce a certain amount of revenue lift in strategic businesses.”
The likelihood is that people will only be recruited into a specific role that they already have experience in. Springer at Napier Scott says: “You need to find a similar role somewhere else. For example, if you are a good UK corporate originator, banks are not going to take you on to cover Germany for them.”
Overall, the demand for technical skills from all the hiring banks is becoming more and more apparent. Candidates in structured debt and derivatives are still in demand as these are growth areas. The same applies to fixed-income traders now that banks have clocked up a few quarters of stellar growth in this, particularly when some of the most skilled traders are heading towards lucrative jobs at hedge funds.
“We are seeing that within the credit and structured credit markets there continues to be demand for strong originators in the German market, CDO professionals, real-estate professionals and structured credit sales and trading professionals with three to five years’ European experience,” says Deborah Dor, managing director of recruitment firm Mantaray Partners.
Fixed-income sales staff covering the hedge-fund market are also in demand. CSFB is one bank that set up a fixed-income hedge fund sales team in February, headed by Tom Pitts, who was formerly at Morgan Stanley. It has added another person since then and plans to make further hires.
The trouble is that while the established players are not hiring in the same league as mid-tier banks and plenty of people still want to move, such banks as ABN Amro, SG and RBS can afford to be demanding without offering that much cash and exact different standards of behaviour. Cameron claims that banks such as ABN Amro offer a much more positive culture. “Some banks are riddled with politics which will tend to make it a very uncomfortable place for the employees to work,” he says. But the conditions that candidates need to fulfil to get out of a bank with that mindset are pretty stringent. “We are very harsh on people who don’t play as part of the team,” says Cameron. “Anyone who does that gets told off because what the client needs is the ability for several teams to work together.”
Cameron says he will still offer guaranteed bonuses if appropriate, but won’t pay over the odds. “The last 12 months have been very fertile – we’ve been getting the right candidates at the right price.”
SG’s Varenne agrees: “It’s better to offer someone a solid working environment in which they can grow rather than just a big cheque. Some banks try to poach staff with huge packages but the fact that they keep having to do it suggests that it may not be the best strategy.”
Some headhunters are sceptical that banks can retain staff on lower wages, particularly when other banks start recruiting. ABN Amro has paid modestly in the past and so had a fairly high turnover. However, while bulge-bracket players are navel-gazing or recruiting mostly internally, smaller houses are attracting high-calibre candidates from outside for less. “Package is not such an important driver when bankers are in their late 30s or 40s, but give them a mandate to build a business and they thrive on that,” says Gindre.
Things may soon get tougher for the recruiting banks, as the pool of out-of-work talent that has flooded the market over the past year dries up and other banks become keener to hang on to what they have. “I think the pool will dry up over the next 18 months,” says a source at an expanding bank. “A few people are already getting bought back from us – it’s getting tight.”
One banker confirms that talented people are getting scarce and that while there are still capable senior syndicate and leveraged-loan people who have lost jobs through downsizing, finding good high-grade fixed-income people is harder. Headhunters think this bodes ill for those still seeking work. One says: “If you’re out of the market for six months, it’s an eternity in capital markets. If you haven’t found a job from last year’s lay-offs, the sad fact is you’re not going to get one.”
