If you're hoping to find a new banking job in London before the end of 2019, you might want to avert your eyes from today's third quarter results from recruitment firms Robert Walters and Michael Page. Both are active in the London finance market and both registered a year-on-year drop in UK fee income (11% for Robert Walters, 4% for Michael Page) during the last quarter. Both say Brexit is to blame.
Is Britain's protracted and pained effort to extricate itself from Europe really behind your struggle to find a new banking job though? Recruitment firms who are deeper in the finance mire are sceptical. "Brexit being used as an excuse," says one.
There's little doubt that finance jobs in London are less plentiful than in the past. Recruitment firm Morgan McKinley's London employment monitor for summer 2019 said the number of available jobs fell 50% year-on-year in the three months from April to June. An update is due soon and it's unlikely to be pretty. Search firm Sheffield Haworth says the top 10 global banks have hired 28 managing directors in investment banking in EMEA so far this year, but lost 37. - The big shops are shrinking, and the squeeze in London is tighter than elsewhere.
Not everyone is ready to pin the blame on Brexit, though. Logan Naidu, CEO of recruitment firm Dartmouth Partners, which employs 100 finance focused recruiters in London, says they've had a record month and a record quarter. Dartmouth works with boutique M&A firms and private equity funds which are still busy hiring. It's the big banks doing "volume hiring" which have stopped, says Naidu. "This might be due to Brexit, or it might be due to the point we’re at in the cycle. There’s a lot of talk about the market being over-heated, and this is reducing confidence and bullishness,” he adds.
Markets headhunters in London also have far more than Brexit to deal with. "Brexit is not helpful, but MiFID II has had a far greater effect on hiring in the cash market," says one. MiFID II has precipitated faster growth in electronic trading and falling cash trading revenues: "Banks aren't making money and they need fewer people anyway." By comparison, he says Brexit is a background effect, along with Trump's trade war and fears of a market correction. "There are bigger things going on here than Brexit," he says. "There are structural changes to the market, and revenues are coming down anyway."
And yet, without Brexit the climate for London banking recruitment would almost certainly be much sunnier than it is. Coming on the back of a 13 year low in banking revenues globally, Brexit has nudged hiring into the long grass where it may be prostrate for sometime. One senior fixed income headhunter in London says that until Brexit happens, and until banks have visibility on who will and who will not move to European offices, it's difficult to get anything done. "Brexit is slowing-up hiring and movement," he says. "There are a lot of people out there who have contracts to move to Europe, but many them don't really want to and neither they nor banks know where they stand."
Amidst the uncertainty, it's worth noting that European regulations may be hindering recruitment in London too. Europe's insistence that bonuses are restricted to no more than two times salaries has increased salaries in the City, leaving banks with no option than to cut staff when revenues fall. "A much higher proportion of the compensation pool is now fixed costs," says one headhunter. "So you're seeing much higher redundancies. No bank wants to be seen as hiring when everyone else is firing and you don't know who will come out of the woodwork when other banks cut, so everyone is sitting tight."
Photo by Yangki Suara on Unsplash
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