Hammond Partners’ Equities, Fixed Income & Currencies practices have an established track record of placing individuals from VPs to Global Heads for both US and European investment banking clients. While the Equities business has seen a shift in structure over recent years, there are some real signs of recovery.
However, challenges have continued in the Fixed Income market with little volatility and historically low interest rates that are in danger of being slashed further.
Hammond Partners’ consultants discuss how hiring has been affected by the upswing in equities and the downturn of fixed income.
Emily is a Partner at Hammond and specialises in Equities (Cash and Derivatives), Corporate Broking and ECM working across sales, trading, research and structuring from Associate Director to Global Head level.
Andrew is a Partner in Hammond’s Fixed Income & Currencies practice. He specialises in Fixed Income sales and has completed searches at all levels, helping clients to build their fixed income franchises.
Juliet specialises in Investment Banking, Capital Markets and Financing. Having always specialised in primary markets she built the Debt Markets and Financing practice and has worked across all aspects of Investment Banking.
Where has there been hiring activity within the primary and secondary markets?
What is driving this demand for people within the challenger banks?
What has the movement been like in tier one banks?
What hiring challenges are there within the growing equities market?
Juliet: In capital markets and investment banking the big theme over the last six months or so has been that people are definitely building the structured finance and securitisation side of their businesses again which in Europe has been fairly close or decreasing in terms of head count numbers over the last three years.
Richard: Equities has gone through a re-structuring, and cost cutting has made it a tough space to be in over the last couple of years. However, there is certainly a resurgence within the structured equity derivatives space and the electronic and portfolio markets continue to grow. European equities businesses are evolving, and although it is nowhere near where it used to be in terms of volumes the space has taken a very positive step in the right direction, particularly in Europe where inflows continue as confidence increases.
Emily: The IPO market has taken off this year, meaning areas such as equity research have become a lot more active and banks have been adding sector teams. This pick up in the ECM market has had a knock-on effect with corporate broking and every house on the street has found themselves lacking resource at junior level meaning a rush on Analyst/Associate/VP-level hiring.
Andrew: In contrast, 2014 has been a challenging year for the fixed income markets. The previous year wasn’t particularly good either as there has been a lot of pressure on the markets, volumes have been very low and there is precious little volatility. This is particularly the case in the interest rate markets due to rates being at historic lows. The result has led to the interest side of banks being hit by falling revenues and cuts.
Credit hasn’t been particularly exciting either, although it has not been as bad as rates. If you look at Banks’ results through 2013 you can see clearly fixed income revenues are down - but those from rates were down more than credit.
While tier one banks have been shedding staff, tier two and tier three banks have been more active in terms of opportunistic growth and hiring.
Andrew: There are many reasons, but it is mainly driven by these smaller banks realising that they now have an opportunity to take market share away from the major banks in their particular areas of expertise.
There is a lot more specialism within the industry now. I believe there will only be a handful of truly international global banks that will offer all products to all people in the future. Outside of that small, tier one group, there will be a lot more regionally or product focussed specialists.
Juliet: Over the last few years we’ve seen a lot of the tier one banks hold steady on head count and if they have lost people they haven’t gone out of their way to replace them. This year people feel they are coming out the crunch and people are more confident about adding headcount numbers or replacing headcount numbers as and when they need them.
Richard: There is a lack of volume of talent at the VP and Senior Associate-level. This is because no one has really hired at graduate-level in the last five years so the talent that would usually be coming through just isn’t there. People don’t want to pay a big price for MDs and Directors, instead they want to get in these mid-level hires but there aren’t that many of them about.
Emily: Hiring managers remain cautious - they don’t have such short memories that they’ve forgotten that the last three years have been really difficult and making a cheap hire at Associate or VP-level will have less impact on the business than if you hire a Director or MD who wants a large pay package to join. Having said that there is always demand for senior, revenue generating rain-maker types. However, there is a dearth of mid/juniorlevel people in the market. We wouldn’t usually recruit below VP-level, but for the first six months of this year that’s where the majority of the demand has been.
Richard: And while these hires are being made with succession planning in mind there is also a volume need in terms of getting the job done - they’ve got to make these hires in order to be able to do a good job for their clients.