Are things on the mend? When Goldman Sachs announced its second quarter results last month, it said it no new 'unusual' job cuts were planned. HSBC reiterated this week that its grand cost-cutting program ended in 2022. Brian Bissonette, an ex-director at Merrill Lynch who now works for M&A execution platform Dealcloud, is letting it be known that his banking clients are saying their layoffs are over.
Good news. Even better news is that there are glimmers of hiring at places like Bank of America. However, with new finance jobs in London down 86% year-on-year in the second quarter according to recruitment firm Morgan McKinley, banking jobs are not exactly booming.
The reality is that there are pockets of hiring and there pockets of firing - often at the same firms. This is a time of haves and of have-nots.
The boutiques are going wild for senior bankers and the senior bankers are going wild for boutiques
The haves are the senior bankers who can bring in deals. Deutsche Bank is hiring them, but the most enthusiastic recruiters are at the boutiques.
Speaking on last week's investor call, Paul Taubman, CEO of boutique firm PJT Partners, said this is the most "consequential" year ever for the firm, which intends to "recruit actively" for the remainder of 2023. It's easier to hire senior bankers against a "subdued M&A backdrop," declared Taubman. For their part, he said bankers want to join boutiques for a range of reasons including a lack of mentoring at big banks, a lack of training, being forced to sell too many different products, an obsession with league tables and insufficient focus on relationships...
If firms want to make a difference, Taubman said it's not enough just to hire one or two new senior bankers. It's about network effect: "The return may not come from the first senior hire or the second but it is the third that completes the ring of the first, the second, and the third."
Maybe this is why Deutsche Bank has hired 50 senior bankers so far in 2023...
But a recovery in investment banking fees isn't imminent...
Despite the hiring, it's not clear that M&A fees are due to recover soon. As we noted yesterday, Wells Fargo analyst Mike Mayo says 2024 will be good; not great. Lazard CEO Ken Jacobs said he's not expecting a 2021-style rebound in 2024. Nonetheless, after cutting people, Jacobs said he sees "significant room for expansion" in both Lazard's advisory and asset management teams.
Banks are more ambivalent about adding heads
At banks, the situation is more murky. There is hiring, but there is firing too.
Deutsche Bank, for example, is investing in controls and gathering-up senior bankers while simultaneously cutting people "in senior non-client facing roles" (saving €100m in the process) and "reengineering front to back processes."
Citi has added 7,000 people in technology as part of its long term transformation program, but is jettisoning teams of high performing strategists.
JPMorgan's corporate and investment bank added 470 people in the second quarter, while quietly cutting juniors in its investment bank.
Nomura is rebuilding its equities team, but costs consumed 99% of revenues in its investment bank in the last quarter and the CFO says the situation requires immediate attention.
Bank of America: a hiring freeze, but...
Bank of America's approach to hiring is perhaps the most opaque. Officially, it has a hiring freeze and is shifting people internally rather than letting them go. Unofficially, it's hiring for its thriving fixed income trading business and is cutting 4,000 people.
Snigdha Singh, co-head of EMEA FICC trading and head of EMEA markets initiatives at Bank of America, told IFR this week that he's making 'ongoing' investments in fixed income professionals in London. BofA has roughly doubled its currency and commodities salesforce in Europe over the past two years and has added 50% more staff across EMEA sales and trading.
While some banks sit on the fence, Bank of America's experience highlights why hiring can be a good idea. All that new headcount helped drive revenues in its fixed income sales and trading business 24% higher year-on-year in the first half; at every other bank, they fell.
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