Welcome back. Or not. While you were watching the flotilla and Gary Barlow, banks, it seems, were plotting redundancies.
The Jubilee bank holidays were a time of multiple redundancy rumours. Hence, the New York Times said Goldman Sachs let go of 50 people last week, many of whom were MDs. Morgan Stanley is preparing to eliminate 100 trading jobs internationally in the next few weeks, that Goldman Sachs may cut deeper and that Citigroup and Barclays want to cut people too. Finally, Financial News announced that Citigroup will cut jobs over the summer, as will Credit Suisse and Deutsche and that JPMorgan has been trimming headcount already.
Bank of America is also making investment banking job cuts in the next quarter.
What are the chances of re-employment?
If you lose your job in the current environment, things don’t look too great – especially if you have the misfortune to be quite senior.
Our poll, undertaken over the Jubilee break suggests 70% of you consider the current hiring environment either cold or freezing. Financial News points out that of 132 RBS equities bankers who were let go in April, only 49 have already found new jobs
If you’re employed and would like to move jobs pre-emptively, before you’re made redundant, another problem appears to be the cost of buying out guaranteed bonuses. Only 14% of our respondents said they’d found new employers who would compensate them for lost bonuses if they changed jobs.
The main issue, however, is high staff costs and foundering revenues. The Financial Times points out today that at 13 major banks, staff costs accounted for 85% of revenues last year, compared to a pre-crisis total of 58%.
Meanwhile, individual banks have their own particular problems.
Earlier this year, Jes Staley, head of JPMorgan’s investment bank, said his employer could have started a compensation arms race had it wanted to, such was the strength of its business. JPMorgan’s CIO losses (now put at $4.2bn), appear to have put an end to that kind of talk.
Separately, Reuters points out that Morgan Stanley’s bonds are now trading at junk, a situation which does not bode well for the future of its sales and trading businesses.
Sunlight in the rain
There are bright spots.
Fresh from a fairly good quarter in sales and trading, Bank of America is targeting $4bn-$4.5bn in quarterly sales and trading revenues . BofA made made $5.2bn in the first quarter, but only $2bn in the last quarter of 2011, and may therefore be interested in upgrading some of its staff. However, in his speech last week, Brian Moynihan also noted that Tom Montag is struggling to keep a lid on costs in the investment bank.
The future looks bright if you’re junior. Goldman is not the only one getting rid of expensive and unproductive senior staff. With buyouts making senior people more expensive, banks are increasingly keen on hiring juniors in order to grow their own. At our recent round table event for heads of recruitment, one bank said it plans for people who’ve graduated no more than 24 months ‘ previously to account for 50% of its total hires in future.
Failing that, Finanical News points out that various brokers (Vantage Capital Markets, Sunrise Brokers and Tradition Financial Services) are all hiring in Hong Kong, mostly for listed and OTC equity derivatives. The Jubilee is over. Now may be the time to leave London if you can.