Temporary hold on hiring and firing

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Jonathan Baines, managing director of Baines Gwinner, the London headhunter, says: 'What we have now is total uncertainty and consequent loss of confidence. There is nobody hiring there is nobody firing.'

That situation is unlikely to last long and the attacks could make a depressed hiring climate worse. 'During the next few months, one would expect unprecedentedly low deal volume and banks are going to be faced with an urgent need to restructure,' says Baines.

He says that investment banks had been poised to launch a new round of cost-cutting before the assault on September 11. A number of mergers and acquisitions specialists were due to have been made redundant, if not this week then very soon.

But the plans for redundancies have been replaced by a moratorium in some quarters on even discussing job losses. One banking analyst at a European bank says: 'For businesses operating in the US, talking about job cuts is far too sensitive an issue now.'

Baines says that when this moratorium is lifted, it is at the mid-sized banks that job cuts are likely to be most widespread. 'Some of the banks that have sought to provide all things to all clients are no longer going to be able to do so if the climate of uncertainty persists,' he says. 'It will be difficult for them to achieve savings without pulling out of certain businesses altogether.'

Other leading headhunters doubt whether the employment outlook has grown any bleaker because of the attacks. Martin Armstrong, managing director of Armstrong International, says: 'This is not going to have a big impact. In financial services, it is when things are bad that good people innovate and come up with different business ideas and that things get moving.'

This optimism is echoed by Hugo Yadi of headhunter Garner International. 'Activity in the mergers and acquisitions and corporate finance sectors will recover given the current economic climate, and the prevailing low company valuations will create mergers and acquisitions opportunities,' he says.

While banks wait for such opportunities to reappear, staffing needs in some sectors are likely to rise as a result of the short-term uncertainty. Headhunters in London believe that experts in debt restructuring, alternative risk and catastrophe products, and securitisation are likely to be among those who are sought after in the coming months.

'The whole area of risk management and risk control is where banks feel understaffed at present,' says one recruiter. Odgers Ray and Berndtson, the headhunter, expects some types of operations staff may also be in demand as banks repair systems that were damaged in the US.

Just as employers are pausing to consider their options, so too are employees. Lena Baillie, a corporate finance consultant at Longbridge, the headhunting firm, says: 'Uncertainty seems to be making people less willing to take new positions, particularly out of the country.'

There are also signs that some British financial services staff in New York would now prefer to be on home soil. One London headhunter, says: 'Last Monday morning I received seven CVs from New York specifically saying that they wanted to relocate outside the US. That is unprecedented.'

Simon Hearn, of the headhunter Russell Reynolds, says the tragedy in New York is prompting some Australians, as well as Britons, to contemplate relocation. In the short term, Russell Reynolds expects employers may have to offer more generous pay packages than before to tempt people to move to New York.

But the attacks seem unlikely to dissuade new entrants from a career in financial services. 'There is a risk associated with everything,' says an undergraduate who was working as an intern at Goldman Sachs at the time of the disaster. 'I could choose to be a bus driver and I could crash the bus. This will not affect my decision at all.'

Marie Bosse, director of the careers department at Insead, the business school, says she believes MBA students will not be dissuaded from a financial career. 'If students are interested in finance, it is a very deep interest. this will not dilute it,' she says.

She adds that Morgan Stanley made a presentation at Insead last week, and that it was as well attended as previous presentations had ever been.

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