News of more redundancies from Goldman Sachs and Citi has given bankers the spooks this summer – and it seems that no one is truly safe. Helen Castell takes a look at the recruitment market to find out if anyone is still hiring.
While trade and commodity finance teams continue to perform better than those in other sectors, some banks have imposed blanket hiring freezes and those that are recruiting are culling budgets and taking longer to come out with offers.
However, it’s not all bad news. Hot spots like China and the Middle East remain desperate for polished professionals. Senior specialists and bright young multi-taskers are still in demand. And compensation levels – even if the past five years of massive rises have officially ended – are holding up surprisingly well.
That trade finance is insulated from the credit crunch remains partly true. But with many banks increasingly nervous, some are taking a one-size-fits-all approach to recruitment, consultants say.
“When I”m talking to line managers, they are very busy and to some extent are frustrated – they want to do more business but are constrained by limits,” says Michelle Guile, director at Keysource Consulting in London. “Sometimes the overall policy of a bank can be that there’s just a general freeze. Even if some areas are doing very well and are very busy, they get tarred with the same brush.”
“And unfortunately, the bigger the bank, the more removed the overall management can be from the day-to-day issues.”
“Clients are being very cautious about recruiting,” agrees James Rainbird, managing director at Rainbird Associates in Geneva. And although banks are still starting searches, ultimately many positions are not being filled. “We are finding in some cases that when the selection process has whittled down to the final candidate, previous budgets for new full-time employees are no longer there as recent market turbulence renders existing budgets obsolete.”
Employment hotspots
Commodity finance is still an area of growth for banks – and one that many want to be involved in, notes John Whitehead, consultant – commodity finance, at Commodity Appointments in London. However the credit crunch has resulted in “a certain amount of introspection across the range of many banks’ activities,” and this means “some expansion and recruiting plans have been put on ice”.
Because some banks are being forced to make staff redundant, “where possible, instead of going to the market to fill slots, they are trying to see what lateral moves they can make for people,” he says.
The skills required for commodity finance are “fairly transferable for some roles,” and “it’s obviously in everybody’s benefit to do that, because it makes no sense to recruit with one hand and lay off with another”.
“I would expect that situation where it’s a little bit quieter on the recruiting front to keep going until the end of summer,” by when the current round of redundancies should have played itself out, Whitehead adds.
Internal transfers however are not always the answer, especially for sectors like commodities where industry experience come at a premium, says Thomas Bispham, executive director at Huthart & Company in Hong Kong. While shifting a commodities financier from London or New York to Asia might work, cross-team transfers are seldom up-to-speed fast enough, he notes.
“In some of these industries, the feeling is that there are plenty of people around who can structure a deal, but you really want to have somebody who understands the fundamentals and can go in and talk to a chairman.”
In difficult times like now, “if [banks] are going to hire someone – whether it be internal or external – they want them to hit the ground running straight away,” adds Bob Flores, president at Flores Financial Services in the US. Therefore, “a lot of them have had to go outside the organisation to find that talent”.
And while banks used to move fast if a candidate had the right skill-set and chemistry, they’re now taking up to three months longer to make offers, he notes.
“Clients are being more selective,” adds Whitehead. “They’re willing to wait a little longer to fill a slot, to try and find the right person. Rather than making their priority just filling the slot.”
“There is a need, but it’s not as straightforward to get the approval [for making a hire] in place,” says Guile. “It seems to be that banks are having to make very strong justifications for hiring. But in trade there is a good justification I think.”
“Whereas before, approval for sign-off for a head count would just go to the head of division, in some banks it’s now going further and further up the line, making it slower,” she adds.
Occasionally unrealistic expectations on the part of banks are also slowing the process down. Some consultants report banks trying initially to hire bankers on six-month contracts, but then having to upgrade the opening to permanent when there were no suitable takers.
Others talk of banks offering compensation deals that were too low to attract skilled staff and having to come back later with a bigger offer, potentially adding several months to the hiring process.
Where are the potential job losses?
And of course there is the spectre of redundancy, which in the current climate could affect even strong teams. But who is most likely to go?
Job losses that do occur will be more at the middle-management level, which is considered a cost worth cutting as banks install heavy-weight systems, says Robert Watsham, partner at Odgers Ray and Berndston in London. “It’s the people at the top end of the market who we’re moving from organisation to organisation who will quite obviously survive that. Because they’re the cream of the crop and they are the people who the banks are after.”
Talk of redundancy need not alarm readers however. Many banks are still hiring specific skills – and for the right people, they’re still paying well.
Although appetite for geographic risk has “moderated in some areas” for trade finance and forfaiting, some banks are upping their activity and “selectively recruiting,” says Roger Kent, consultant – commodities and structured finance, at Healy Hunt in London.
And the fact that trade finance has in recent years suffered from a dearth of good qualified people means that there are still opportunities for those that fit the bill, says Watsham.
Demand for originators and business developers is still strong and banks are prepared to poach talent in these areas, says Whitehead. “If someone has a good contact list … they are immediately a valuable commodity.”
“We’re still looking for some people in structured export finance,” says Bispham. “Probably less so in traditional trade finance, unless it’s more of a clerical level.”
Commodity finance also “continues to be very robust,” and candidates with an industry background are very much in demand, he adds. “It’s one thing to be a banker and have relationships, but a number of the banks are putting a premium on individuals who actually have relative industry experience.”
Guile and Rainbird meanwhile both report more demand for middle and back office staff, as banks rush to build their supply-chain solutions.
If in doubt move to Asia
And if certain candidates are still in demand, there are also geographical markets that are hiring them faster than anywhere else.
One region experiencing “huge demand” for experienced people is Asia, which Commodity Appointments now serves from a Singapore office it opened in January, Whitehead says.
“A lot of the banks over there are developing their local operations, expanding them rapidly and clearly there is a huge boom.” And they are manning these operations with a mix of local and ex-pat professionals, he says.
“The Asian market is extremely hot at the moment,” agrees Watsham. “I’ve been out there twice in the past three months, working on assignments.”
“There’s a continued need for people in the China market,” adds Bispham. “Our Shanghai office continues to see good demand.”
Hong Kong’s aspirations to develop a carbon exchange could meanwhile drive appetite for commodity financiers, and “incipient demand” in this area is already apparent, he adds.
“People are starting to prepare. They’re interviewing, they’re talking to people, but I don’t think it will really take off until the end of the year.”
For commodity finance, while “all geographic areas remain busy,” this is especially so in Francophone and Sub- Saharan Africa and in Russia and the CIS, says Kent. In these regions, leading and second-tier banks are enjoying an active deal flow and “we have seen a strong demand for middle-to-senior-ranking professionals”.
Geneva is storming ahead of London in terms of employment. It has been “a terrific success story as the city has attracted commodity traders with advantageous tax breaks.” According to Rainbird. “And as a result the bankers have followed their clients.” Also Dubai is a popular location, where soaring salaries are being paid, he says.
While three years ago, Dubai salaries were lower than London’s, its tax-free status and ex-pat benefits made a move to the Middle East attractive. Now Dubai salaries are far more in line with London from a base and bonus standpoint. “When you add to that the tax-free status, the city continues to offer a considerable upside,” Rainbird observes, although adding that “rents in the city have gone through the roof”.
A structured trade finance director in Dubai for example could now expect to earn US$350,000, Rainbird says. “When you factor in that their take-home pay will be 40% more than that in the UK, you start to see the appeal.” However, “the salary inflation there has become so excessive that it is difficult to try and recruit from within the Dubai market.”
Salaries are, if anything shifting upwards, and bonuses are driving this growth, says Watsham. Typical base salaries have risen 30-40% over the past five years to an average US$200,000, with bonuses – jumping 100-200% in the same period – now two to four times bigger than base, he says.
“None of the banks are shying away, currently, from the numbers that are being pushed around,” he says. “This was a mid or back-office business 20 years ago, now it’s very much front-of-house. And global salaries are being paid.”
“Where there’s a very specific need for someone with certain skills, then I am seeing salaries being pushed up, to the point where I’m having to advise some of my clients that the market is demanding more than they’re offering,” says Guile.
Many recruiters however expect this salary growth to slow – or stagnate – in the near term.
“Last year we had too many positions and not enough candidates. This year we have candidates and fewer positions,” notes Bispham. Salaries may continue to grow in certain key commodity areas, and “good people will still be rewarded,” but generally, guarantees are no longer being paid, and salaries are starting to move sideways.
In structured commodity finance, high salaries remain prevalent, although “in some cases in the recent past there has been downward pressure on bonus levels,” agrees Kent.
In trade finance and forfaiting, “compensation levels remain strong and the high calibre individuals are, as ever, much sought after,” Kent adds. Bonuses however have moderated, but should be good this year if results are as strong as expected.
In the last five years, salaries and benefits shifted up significantly – but over the past year “it’s been pretty flat,” says Flores. “I think everyone’s just hoping they have a job.”
That said, salaries are no longer the key motivator for candidates, with many more interested in picking a company that is still going to be a heavy hitter – or at least in business – after the credit crunch has played out, he says.
“Some of the people I’m working with are looking at the landscape to determine who are going to be the end-of-game players in this business. And that’s where I think you’ll see a lot of lateral movement, compensation wise.”
And this could become recruitment’s big new theme. Yes, fewer jobs and slower sign-offs put banks in charge when it comes to run-of-the-mill candidates. But for trade finance’s top stars, which company you join is more important than ever.
Until it becomes clear which banks will drag themselves out of the credit drought, ask not what you can do for your bank, but what your bank can do for you.
