ANALYSIS-Investment banking faultlines trigger European job shake-up

"Those smaller or less prestigious firms are now in a position to compete and will scoop up strong talent." CURBING COSTS The jobs shake-out is expected to put pressure on salary and bonus growth over the medium term but for now, ambitious banks will likely pay up for big-name hires, cutting back-office or non-client facing roles to find the cash, the sources said. Data on Tuesday showed business and finance sector workers saw the largest average growth in regular pay across Britain in the first quarter of the year, enjoying 8.8% compared with an average 7% for other private sector workers.

A dearth of deals, banking sector ructions and most recently the aftershocks of the demise of Credit Suisse have rapidly redrawn the European financial services industry jobs map this year.

One example is banks in the region opportunistically targeting high-flyers affected by the impending takeover of Switzerland's second largest bank by its domestic rival UBS , headhunters say. And on the other side of the equation, recruitment firms report receiving more resumes from finance staff concerned about being ousted by such new hires.

"Europe is lifting hiring freezes and in some cases finding that exceptional talent, once untouchable, is now recruitable," Jeanne Branthover, New York-based Managing Partner and Head of Financial Services Practice at DHR Global, told Reuters. "This is causing firms in Europe to re-evaluate their own people to determine if they measure up to the new standard of remarkable talent that has suddenly become available," she said.

Applications for financial services roles globally rose by 67% in the first quarter of 2023 against the same period last year, according to eFinancialCareers. Recent high-profile moves include veteran Credit Suisse dealmaker William Mansfield, head of M&A in EMEA, who is joining Deutsche Bank, while his ex-colleague Cathal Deasy, took a role as co-head of investment banking at Barclays.

Such moves come as an extended lull in activity, including in initial public offerings (IPOs) and mergers, is dimming the outlook for revenue this year. Meanwhile, thousands of the UBS and Credit Suisse workforce await clarity over their futures. Media reports suggest UBS could axe up to 30% of roles across its enlarged operations. UBS declined to comment. Samantha Pusey, head of bids and marketing at recruitment consultancy The Curve Group, said firms were carrying out skills gap analyses, identifying personnel needed to chase growth and pinpointing where current staff fall short relative to others now potentially up for grabs.

"What we're seeing is people at the Senior Director and Vice President level who probably weren't open to new opportunities are now entering and flooding the market," Pusey said. Smaller financial firms are also expected to benefit from the rise in jobseekers, with some priced out of the hiring market in recent years by competitors with bigger pockets, said Darren Burns, Operations Director at Morgan McKinley.

"Over the last two years, substantial hiring needs against a skills shortage across the finance sector saw large firms paying over the odds for talented individuals, resulting in offers for salaries 20-30% higher than before," he said. "Those smaller or less prestigious firms are now in a position to compete and will scoop up strong talent."

CURBING COSTS The jobs shake-out is expected to put pressure on salary and bonus growth over the medium term but for now, ambitious banks will likely pay up for big-name hires, cutting back-office or non-client facing roles to find the cash, the sources said.

Data on Tuesday showed business and finance sector workers saw the largest average growth in regular pay across Britain in the first quarter of the year, enjoying 8.8% compared with an average 7% for other private sector workers. Bonus pools at the likes of Barclays and HSBC shrank in 2022 as a plunge in dealmaking activity slashed advisory fees but BNPP opted to hike its payouts by 14%, increasing the number of staff earning more than 1 million euros in 2022 by 26% to 369.

Britain has already said it will scrap a cap on bank bonuses under plans to attract global financial sector talent. While they scout for top talent, several banks are also trimming their numbers in some business areas to curb costs.

Morgan Stanley is among those weighing cuts in the second quarter, while France's BNP Paribas is also shedding roles through voluntary redundancies and internal mobility. Deutsche Bank is eyeing 800 cuts to its 87,000 workforce under plans to reduce costs by an additional 500 million euros.

Worries about possible contagion triggered by the frailty of the U.S. regional banking system have also put some bank staff on a quest for more secure employment, sources say. Duncan Finlayson, managing director of the FinTech & Financial Services practice at Raines International, said some wanted meetings with chief financial officers to better understand the financial health of prospective employers.

"Without a doubt some of the more established financial services platforms are under more heavy scrutiny," he said.

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