Monthly Market Reports.
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Traditionally we have seen a lull in hiring activity at this time of year. However, this is the first time since 2010 that we have seen a reversal of that trend. This is a long-awaited positive indicator that the long term downward trend in City hiring may be turning.
There has been an increase in hiring to support activity in equities and equities derivatives. In particular we are seeing banks put increased resources into the more specialist equity derivative products, and into their quantitative trading programmes.
Delivering impending regulatory requirements remain a major driver of City recruitment. In particular, the introduction of the new European Market Infrastructure Regulation (EMIR) rules that will require firms to use central clearing facilities and report trades in a wider range of derivatives transactions including OTC trades, is prompting banks to expand their specialist regulatory teams.
Full November Report
Although City hiring activity has not taken the leap forward that many are hoping for, there has been an increase in new contract roles, particularly within asset managers. Optimism is high and an increase on contract hires is an early indicator of recovery in the City jobs market – but there is a fly in the ointment. The financial performance of the big investment banks is still not robust enough for them to initiate the levels of hiring that you normally associate with new stock market highs.
Improvements in the number of short-term hires is an early indicator of recovery in the market. In order to mitigate risks, many firms will begin with hiring contractors until the market recovery is seen as sustained enough to start making permanent hires. This revival in the contractor market is a promising sign that the market will be picking up pace in 2014 but for most banks managing costs still takes precedence over growth.
Full October Report
Despite the market being very upbeat about the return of IPOs this has yet to trigger a surge in City hiring. Any hiring to support IPOs and M&A has largely been offset by pressure to downsize other parts of investment banks.
There are increasingly signs pointing to a recovery in the sector, but the readjustment of the industry in the wake of the financial crisis is a slow process, involving some fairly fundamental restructuring from the banks. It may not be until the spring, when the jobs market is usually at its busiest, that we expect to see an expansion in City recruitment.
Full September Report
In recent years employers have found it very difficult to justify replacing staff let alone increasing headcount for roles outside of this, which has left some areas operating with just a skeleton team.
But now City employers seem to be feeling more comfortable about staffing up in their most profitable divisions. They want to be ready to take advantage of growth opportunities as the economy picks up and the outlook improves for equity markets and IPO and M&A activity.
City workers, who may have been playing it safe and staying put, are now starting to feel more confident about moving on. That has led to a tentative increase in those job vacancies created when an employee creates a vacancy from swapping to another employer – even though it’s unusual at this time of year to see that kind of movement accelerate.
Full August Report
Positive recent results from some banks is fuelling renewed confidence.However, this has not yet translated into an increase in new roles across the industry as regulators’ more stringent requirements on capital are making banks more cautious about expanding headcount.
Some banks are starting to make growth hires for the first time in many months. In particular, many are anticipating the continued recovery of the IPO market. Europe’s IPO markets have gained strength in the second quarter of this year, with €5.2bn being raised in Q2, a 58% increase on the €3.3bn raised in the first quarter of the year. Several banks are also reporting strong IPO pipelines for the rest of the year.
However, the regulatory pressure on banks to boost their balance sheets means that many banks have put recruitment on hold while they review their operations in order to focus only on the most profitable areas.
Full July Report
Despite the market fallout from Ben Bernanke’s speech, mid-June saw perhaps the busiest hiring week of 2013 so far.
Sentiment within the City has improved in the last few months. This optimism appears robust enough not to be dented by a correction in the market, however, banks will want to see the current levels of demand continue for a longer period before they commit to hiring on a larger scale.
Despite recent monthly gains, job creation in the City is still running at less than a quarter of its pre-financial crisis levels. Although City firms are still pressing forward with gradual hiring programmes, the numbers involved are still fairly modest compared to prior to the
collapse of Lehman Bros.
Full June Report
Whilst the FTSE 100 has pulled back a little in recent weeks, there is some renewed optimism in the City.
Pressure remains on the banks to keep costs reined in, and many senior staff at investment banks are also tied up in dealing with regulatory issues – ranging from the minutiae of compliance work through to capital adequacy. Consequently, they have had little time to focus on pursuing new areas of growth. However we are starting to see the banks consider more revenue generating projects.
In addition to the recent highs hit in the equity market, corporate debt issuance is also strong, with European companies issuing $64.1 billion of high-yield bonds this year, almost double the amount compared with the same period in 2012.
However, we’ll need to go through a much longer period of stability before the shareholders start encouraging investment banks to increase head count.
Full May Report
Spring is traditionally peak hiring season as candidates look for new roles after their bonus has been paid. However, we are not seeing quite the same amount of interest from prospective candidates as had been the case in previous years. Candidates understand how fragile the market is, and with bonuses now making up a smaller proportion of their overall package, there is less of an incentive to pocket a bonus and then rush into a new role.
As the year progresses we expect to see a continued rebalancing in the supply of candidates in the market. This may mean that the ‘war for talent’ could start to heat up in the second part of the year should business conditions improve throughout the second quarter. Accordingly, retaining key staff should remain at the top of employer agendas.
Regulation, change and managing risk are still driving recruitment in the City. A natural consequence of the current focus by firms is that a lot of the remaining hiring activity is ‘maintenance’ work - finding replacements or acquiring individual high flyers.
Full April Report
2013 started off on a positive note, with a month on month increase in the number of new City jobs. However, March saw a halt to this improvement - a stark reminder that the City hiring market is still very fragile.
Simmering concerns over the Cyprus bailout is a reminder that we will all be feeling the painful after effects of the credit crunch for some time to come.
There is often a spate of job moves in the City in March because many bonuses will have been paid and staff look to move. This year has been very different, because City staff are reacting to the uncertainty in the market by sticking with their existing employer.
Without guaranteed bonuses to tempt them to move, many are deciding that their job security is better at their current employer. That means that firms that are trying to hire staff are having to choose from a smaller pool than usual, meaning that the war for the very best talent remains as fierce as it ever was.
Full March Report
A steady month on month increase in new jobs since the start of the New Year is definitely positive news after a very unsettled time through most of 2012. However it might be premature to start talking about a healthy recovery in the City jobs market, especially with the unpredictability in the Eurozone due to the deadlock in the Italian election.
Confidence is growing amongst employees as the number of City staff looking to switch employer has leapt 46% over the last month. Whilst City staff may not be banking large bonus cheques this year, they feel that the recruitment market is showing enough signs of improvement for them to risk moving jobs.
Redundancy programmes were so widespread across the banking sector in 2012, that many workers were put off changing jobs and joining an employer where they had no established roots or track record. That fear has subsided a little. Bankers realise that changing jobs or getting a promotion is the only real way to get a significant pay rise in today’s market.
Full February Report
As is usual for January, the City jobs market has bounced back significantly since the start of the year. However, that rebound has come from absolute rock bottom in December.
New job creation in the City remains depressed as politicians and regulators continue to pile pressure on the investment banks to scale back activity. In fact, these pressures have had such an affect on the job creation agenda that there are signs of regulators easing off slightly in some areas.
For example, the deadlines to meet Basle III requirements have been relaxed and there are indications that the EU rules on “ring fencing” of investment banks may also end up being less aggressive than feared.
An end to the Greek exit panic and a FTSE-100 at its highest level in over four years could also improve the stability of the jobs market in the City over the next year. But for the time being the job market remains challenging.
Full January Report
2012 was a busy year for HR departments across the City as cost-cutting remained a key focus for firms throughout the year. Many banks took action during the year and implemented major structural changes including winding down entire units. Although banks may still tinker with staffing numbers, it is our view that most significant cuts are likely to have now been made.
In addition, some of the dark clouds around the Euro – which has been a major concern in the City for the last eighteen months – seem to have lifted which could improve hiring confidence in 2013.
Whilst the closure in the US budget battle is still to come, markets have responded well to progress already made there. For the world’s largest economy, which is so important in setting trends globally, 2013 has certainly started on a more positive note than 2012 ended, which could help mitigate the gloomy outlook around hiring.
Full December Report
This month’s drop in roles has created the worst November for City jobs since the credit crunch. The jobs market has been more stable over the last few months so this dramatic fall in the number of opportunities becoming available is concerning. A recent CEBR report highlights that London is starting to fall behind competing financial centres. During 2012 the number of jobs in London fell below that of New York for the first time since 2000.
Similarly, new job seeker numbers continue to thin as many opt for staying put with their current firm. In such an environment, we expect to see challenges lying ahead for direct hiring teams to identify applicants until more visibility of employment opportunities returns to the market.
Hiring in the City typically slows at this time of year, with improvements usually starting to show in the New Year. About this time recruiters begin to gain some visibility over planned hiring for the coming year. To date firms remain fairly tight-lipped about 2013 which suggests that there is unlikely to be a significant bounce in new roles in January.
Full November Report
October’s results show further signs of stability in the City jobs market.
This year, many investment banks have been closing service lines which are seen as non-core. Many boards in leading investment banks are reviewing fundamental changes to the way their businesses are structured and the sectors they operate in and this is keeping demand for new jobs low.
In previous years we have seen at least one of the larger investment banks taking advantage of weakness in the jobs market by going on an aggressive hiring spree and building capacity; that just isn’t happening at the moment. Some of the more specialist and nimble City firms are looking to grow service lines that some of their larger peers are withdrawing from, however their activity is not yet of the scale where it will impact the overall City recruitment trends.
Full October Report
The last quarter has seen the widening of the Libor scandal and announcements by a number of banks to continue to scale down their investment banking operations. Tighter regulations, lower returns caused by the need to hold higher capital reserves and low levels of activity caused by continued political wrangling over the Eurozone crisis have all conspired to depress income for investment banks. It has proved to be an unexpectedly bad summer for bankers.
We are not expecting the City jobs market to collapse and there have been signs of stability in 2012. However, in the current context, it seems likely that the City jobs market will remain subdued to the end of the year.
Full September Report
Over the last month, the City has had to contend with not only the diversion of the summer holiday season, but also the Olympics. However, even in these circumstances, we have only experienced a 2% drop in roles released in August. The more stable jobs market is a relief after the major falls experienced in Spring and this slight drop is far less dramatic than the usual summer slowdown.
We expect to see some improvements in September and October as people return from their summer holidays and the banks look to prepare for 2013. Although they won’t be expecting a bumper start to next year, this planning usually creates new jobs.
Full August Report
Although there has been some growth over the last month, the general appetite to proactively hire in the City remains thin. Banks are hiring, although this is more often than not to replace departing staff, as opposed to reacting to anticipated growth in revenues. With the uncertainty generated by the ongoing rumblings from the Spanish banking sector and the seemingly ever-present Eurozone problems, we’re not expecting the market to improve dramatically in the near term. Still, in this context, a stabilisation in job numbers is seen as positive.
London’s reputation as a centre of banking excellence has been damaged over the last few weeks and there is always the risk that politicians and regulators may over-react. Uncertainty over the future and regulatory burden could keep hiring confidence low. Politicians and commentators need to stay balanced in their contributions to the public debate about the future of the City, as they risk jeopardising a major source of jobs.
Full July Report
This month’s dramatic drop is an unfortunate reminder that we are still in a soft hiring market. While banks and other City firms continue to hire staff, this is being driven by the need to plug holes in their ranks rather than an increase in specific business areas to pursue growth.
Whilst there are signs that the City jobs market is piecing itself back together after a turbulent end to 2011, we aren’t expecting an immediate pick up in confidence. The number of new vacancies in London and Canary Wharf during Q2 2012 was relatively flat on Q1. We expect the Olympics will act as a short term brake on the creation of new vacancies during the third quarter. A return to full health in the City jobs market remains some way down the track.
Full June Report
Although the Eurozone crisis is a block to a stronger and more sustained recovery in the financial services sector we have seen a gradual return of confidence amongst City employers. Sentiment has improved since the latter stages of 2011 but, to put this month’s substantial increase in perspective, the jobs market is still far lower than this time last year. This positive trend in banking recruitment could well continue into June. Beyond that, it would be foolhardy to predict which way the City jobs market could go because Europe’s future is so uncertain.
The number of City staff looking for a new job has dropped to a twelve month low, with 1.6 qualified staff for every available job. This has dropped slightly from April, when there were over 1.8 candidates for every role and reflects a continued tightening in the candidate pool. The pressure on banks to show restraint on pay and remuneration packages has shown no signs of abating. City staff may feel that – with pay rises for switching employers looking less and less likely – they are better placed to sit tight for the moment.
Full May Report
The City jobs market showed signs of improvement in April as investment banks, buoyed by better results, stepped up recruitment. However, demand for staff continues to be predominately focussed on replacement hiring although during April we began to see a resurgence in requirements for technology staff, particularly contractors. Demand for regulatory and change related skills remains consistent with the first quarter.
While this month’s increase in job numbers is a welcome development, underlying recruitment activity remains fairly flat. Most interestingly, the time elapsed between offer, sign-off and paperwork fell significantly in the month, perhaps suggesting a slight thawing in the appetite for firms to make decisions to hire.
In contrast, active candidate numbers continue to weaken, falling to their lowest level in 15 months. This market development implies that the recruitment process will continue to present HR teams with hiring challenges in the near term.
Full April Report
The flow of new vacancies coming onto the market remains sluggish and, particularly for the Tier 1 investment banks, recruitment has been limited to replacing staff lost through natural attrition.
On the supply side, a relatively low level of suitable active applicants is the result of substantial shrinkage in the number of active candidates. Confidence amongst candidates continues to weaken. With many doubtful that they are going to find a new role easily, they are prepared to live with the shock of a low, and in many instances, zero bonus for at least a few months more. However the appetite for candidates to engage in early stage career-move planning remains strong. Our sense is that many are biding their time for conditions to show signs of longer term improvement.
Full March Report
The City job market stuttered in February but showed signs of continuing to stabilise after the decline in the latter stages of 2011. Although the City is still facing very tough trading conditions, and the pace of jobs growth slowed in February, we are seeing continued hiring activity from some of the smaller banks and more specialist City firms. They are keen to take advantage of the abundance of talent on the market and move into some of the territory vacated by the big banks.
The more niche trading firms and hedge funds appear to be under less pressure from shareholders and investors to temper staff pay than some of the universal banks. Many of the smaller firms are consequently able to offer more attractive remuneration packages than they might have been able to in the past.
Full February Report
Whilst demand for staff from the biggest, universal banks, has yet to recover there is much more active hiring from younger, niche financial services firms and smaller banks looking to take advantage of the excess supply of highly qualified City staff. Smaller firms are now the ones creating the lion’s share of City vacancies. We saw a similar trend in 2008 when many of the smaller City firms saw the post Lehman’s crisis as an opportunity to swoop and pick up some very talented senior bankers.
“Some of the more nimble and ambitious City firms see the current market as a good opportunity to build their businesses and expand operations.” Mark Cameron, Chief Operating Officer at Astbury Marsden
Full January Report