When Philip Augar got his first job in the City of London, it was 1978. He'd just graduated (admittedly from Cambridge) and was wondering about becoming an academic historian - except there were no opportunities; or maybe a teacher - except there were better candidates than he; so he settled on the City. Despite knowing nothing about finance and attending a half hour interview that comprised mostly of questions about his background and sporting prowess, the young Augar was given a job: he became an investment analyst on a salary of £100 a week.
Times have changed. While the influx of U.S. investment banks helped professionalise London banking in the 1980s, so the influx of European bankers did wonders for the standard of people working in the City in the 1990s and 2000s. The Europeans tend to be better educated than the British. They speak multiple languages (fluently). They're more likely to work in front office jobs, and they earn more. Recruiters have long complained that Britons are a bit inadequate by comparison.
As jobs move out of London and into Frankfurt because of Brexit, this has the potential to become a real problem. Our estimates suggest that Europeans occupy at least 40% of front office roles in the City. The German banking scene, however, has long been very, well, German. If the best jobs are in Germany, Britons may struggle to get a look in.
"Interviews in Frankfurt can appear very different to interviews in London," warns a German executive director on the trading floor of one major bank in the City. "Graduate candidates in Frankfurt have often progressed further in their studies - they have a Masters or a PhD. 95% of them have some finance, business, economics, or maths background, whereas in London it's more common for students to have studied something completely unrelated to finance."
Because of this discrepancy in educational background, both he and other German bankers say German finance interviews are a lot more difficult than in London. While preliminary London interviews are all about "fit", German interviews go straight for the technicals. "It's absolutely normal to ask German markets candidates about bond maths or M&A candidates about valuation techniques," says the ED. "German candidates find London interviews easy by comparison." Other candidates who've interviewed in both countries say German interviews are a lot more rigorous; a far higher standard is presumed. One German hedge fund manager suggests a good reason for this: strict German labour laws make it difficult to dump unwanted candidates; when banks hire in Germany, they need to get it right.
This is the scene that monolingual British students with little knowledge of banking risk intruding upon after Brexit takes place. While London has been receptive to European students, European financial centres may be less receptive to students from the UK - unless they have a Masters in Finance and a high level of fluency in more than one language.
Even experienced analysts and associates may find their careers impeded under the new reality. Frankfurt-based recruiters already report an influx of CVs from young British bankers trying to get a foothold in Germany ahead of Brexit. Although Elena Barclay, at the German office of recruitment firm Dartmouth Partners, says U.S. banks in Germany are willing to consider applications from non-native German speakers (providing you already speak some German and are willing to learn), non-Germans are at a disadvantage. More importantly, non-native German speakers are denied access to the holy grail of a job in private equity.
Rupert Bell is a Briton in Munich. An Oxford and Exeter University graduate who speaks French and German, he's been recruiting private equity candidates in the German city for over eight years. German private funds are growing, says Bell, but they're rarely interested in hiring people for whom German is not their first language.
"There are over 100 private equity funds in Munich," says Bell. "But very few of them will consider anyone who is not a native German speaker." This is a function of the German economy: "Most of the private equity transactions in Germany are small and involve the Mittelstand," says Bell. "Even though all the deal papers are in English, the Mittelstand owners want to talk to someone they trust and that means a native German speaker. It's just too much of a risk for funds to hire anyone else."
Bell says the most desired German analysts and associates are nursing multiple job offers from private equity funds in the beautiful city of Munich: "There aren't enough good Germans to fill these slots. We see people with several offers all the time."
Meanwhile, as Europe's financial centre shifts east, Britons risk being left behind. Admittedly, there's no much you can do about being a non-native German, but you might at least want to start making provisions for the possibility that an understanding of German will give you an edge in getting the best banking jobs come 2022.
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