In any normal market, front office hiring winds down in the final quarter as banks resist buying people out. This year, banks' heads of recruitment say that probably won't happen. Hiring is likely to remain comparatively strong in Q4 and should ramp up a lot further in 2010. Here's why:
1) Strategic faux pas:
Banks like Morgan Stanley and UBS have failed to capitalize on the money to be made from flow businesses. They're now trying to make amends: Morgan Stanley alone has committed to add 'up to 400 sales and trading positions' in the 'coming months'. Given three month notice periods and the money to be made in the near term, it makes no sense to wait until 2010 to start hiring.
2) The end of caution:
After 18 months of redundancies and nine months of a softly, softly approach to hiring, most banks are now prepared to recruit again following three quarters of solid results.
"We began the year cautiously, but I now see both ourselves and our competitors going to back to decent levels of hiring," says the head of recruitment at one US bank. "I can't see hiring closing down in the fourth quarter."
3) Suppressed desires :
As a corollary to the end of caution, both banks and their employees are becoming more willing to act upon the pent-up urges of the past two years.
"There's been very little movement for the past 12-18 months," says the head of recruitment at another US bank. 'However, people are now seeing conditions in which they can move and banks are seeing windows of opportunity in which they can approach them. Pent up demand is flowing through. 2010 will be a year of building and of significant investment by a number of institutions."
As a counterweight to bullishness, it's worth noting that improving conditions are specific to a few sectors. "Fixed income, equity derivatives, and cash equities are all buoyant," says the managing director of one financial services search firm. "M&A, leveraged finance and structured debt are all quiet."