Holding a senior position in an investment bank isn't what it used to be. You're paid less, particularly in terms of bonuses. If you work in trading, you get to take far less risk. And if you work in M&A, there are all sorts of new rules impeding your ability to delegate work to juniors at the last minute.
In fixed income trading at least, headhunters say the outcome is a new generation of take-it-or-leave it senior staff who can't really be bothered any more. "People are less business-driven and more interested in going to the gym and then picking up their big salaries every month regardless. There's no real point in trying to take risk now," said one fixed income headhunter who requested that he remain anonymous. "They're bored," agreed another headhunter, who formerly worked as an FX trader for a U.S. bank. "Flow has dried up and banks aren't prop trading. Banks are a frustrating place to be if you're a risk taker and they're a frustrating place to be if you're a flow trader - there's no risk, and if you're a reactive trader, there's nothing much to react to in terms of flow. There's no point in it."
As fixed income revenues have fallen, most banks have slashed value at risk in rates and FX trading, whilst cutting the balance sheet allocated to fixed income businesses. Aggressive senior traders are now strongly incentivised to join hedge funds. And if they can't find a hedge fund, they can collect a salary even if they don't pull a profit. A new breed of languid traders is the result.
Not everyone buys into the cult of laziness, however. At Nomura, where fixed income trading revenues have remained robust and risk has been pared back less than elsewhere, head of recruitment Malcolm Horton said people are working as hard as ever before. "People are no less driven than they used to be," said Horton. "These guys do it because they love it - and we actively encourage them to take time out and go to the gym. What we don't want are the kinds of unhealthy lifestyles that have been prevalent in this industry because people didn't take care of themselves. We want people to think sustainably and to have a more balanced lifestyle."
One senior equity researcher, also speaking on condition of anonymity, said he's now working far harder than he used to. "I think I'm working 30% harder than before the crisis. My hours have multiplied - I'm in the office 13-14 hours a day. I'm writing a lot more, and I'm working a lot longer in the evenings - it's just a very competitive market and if you don't keep up your colleagues will trample on you. You can't do this job half-heartedly - that would be like getting half pregnant. If you want to stay in this industry, you need to outperform."
The head of HR at one international bank in the City, also speaking on condition of anonymity as he's not authorized to speak to the press, said it's harder for senior people in M&A to slacken off now. Not only can they not dump work on juniors at the last minute, but the bank watches them carefully. "We monitor people a lot more closely than we used to and we know when someone is really adding to the bottom line, or not," he said.
When senior M&A bankers don't produce, the head of HR said their total compensation is still cut. "There's less flexibility in terms of bonuses, but we're still able to manage total compensation down - we've started differentiating hugely in terms of salary. An MD who's a fully-fledged revenue producer will receive a far higher salary than one who isn't."
In fixed income trading, however, the days of crazy bonuses seem to be past. Declining revenues and reduced risk-taking have coincided with the new EU restrictions limiting bonuses to 250% of salaries. The edge has gone from the industry. "Banks don't need these aggressive traders any more," says the headhunter. "They just need boring people to do what customers want."