The Front Office struggle

The amount of hiring has significantly reduced across almost the entire Front Office. Both Primary and Secondary Markets have been affected with perhaps the only positive increase being in the equities space.

The main driver of this is increased regulation and the cost of capital in areas such as Fixed Income. Jonathan Swannell, who leads the Global Banking & Markets practice at JD Haspel says: “This doesn’t mean to say that there is no hiring going on at all, but it is very selective. There is also some interesting activity being driven by smaller banks – they have particular niches that are active. But generally, the overarching trend is a continued reduction of headcount in Fixed Income.”

Other areas, such as Capital Markets and Investment Banking have also seen very selective hiring activity - generally there have been very small volumes of targeted senior hires to plug specific gaps but there has been no great volume increases. Investment Banking is improving in certain sectors where there might be strong M&A activity, but this doesn’t translate across the board. And despite there being a positive outlook in terms of expectations for the market to improve, banks are still being cautious and aren’t letting expectations translate in to hiring just yet. Instead, as the level of transactions increase, existing staff are having to work harder – in other words, banks are doing more with less.

The way in which banks are paying people has changed too, due to the pressure from the EU over bonus caps. And while it might be thought that this would lead to a talent exodus from Europe looking at opportunities in places such as the US, reassuringly, this doesn’t seem to be the case. People aren’t leaving the continent for better pay packages - instead banks have had to adjust the structure of their total remuneration offering so that base salaries rise in order to offset the falling bonuses.

However, this increase in base salary means that banks’ fixed costs are being driven up. This, coupled with the pressure on revenue, means that the only solution is to cut headcount – creating another reason for surviving traders to work harder. And because remuneration levels are reasonably flat across all banks, candidates are no longer being leveraged by increased pay for the same roles. “People are no longer incentivised to make a like for like move because compensation is rarely a differential,” says Swannell. “They now want to move either to a significantly better platform, or to a broader role within an equivalent or smaller firm.”

Global Banking & Markets - Primary Markets industry consultant listings

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Global Banking & Markets - Secondary Markets industry consultants listings

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