Recruitment is up as confidence returns to most banking sectors, but some segments remain sluggish
The mood in the investment-banking industry is changing. While drastic layoffs have been a common occurrence since the economic crisis of 2008, many firms are beginning to move ahead and start hiring again.
Early this year, Barclays laid off more than 80 employees in its Asian offices – about 15 per cent of its regional workforce – mostly in Hong Kong and Singapore, as its downsized its investment-banking business. Morgan Stanley also let go about 50 investment bankers in January.
It was reported last month that by the end of this year, Britain’s four biggest banks – Royal Bank of Scotland, HSBC, Lloyds Banking Group and Barclays – will have cut about 189,000 jobs from their peak staffing levels of 795,000 in 2008 due to the steep fall in revenue.
Even university graduates have felt the pinch. A recent employment survey conducted by the University of Hong Kong discovered that offers from multinational investment banks are down by about 30 per cent so far this year. The study also found out that the proportion of graduates entering financial institutions dropped from 12.6 per cent in 2011 to 10.1 per cent in 2012.
Nevertheless, the past six months have seen investment banks starting to build back up, albeit in small, incremental steps.
“In these cases, it’s always really about confidence,” says Marc Burrage, regional director of Hays Hong Kong. “In any economy that’s been in a downturn, there are a number of leading indicators that we look at. What we see in specific areas suggests to us that confidence is coming back. But it’s probably cautious optimism at this stage as opposed to full-blown confidence across the market.”
Mark Enticott, managing director of Ambition Hong Kong, sees investment banking as still very much cost-focused, with most banks using business process outsourcing (BPO) suppliers for back-office operations.
“They’re still very much doing offshoring of back-office functions and they’re not doing growth recruitment,” Enticott says. “So a lot of any sort of recruitment that’s being done by investment banks is very much replacement headcount, but I regard it as critical replacement headcount.”
Though some consider 2013 to have been a relatively good year for Hong Kong so far, it doesn’t mean that investment banks are hiring as aggressively as they were during boom periods. The expansion has been mainly happening in selected areas, such as mergers and acquisitions (M&A), which has remained highly active.
“Hiring in M&As is continuing, particularly for people who are in the execution side of M&A deals,” says Sharmini Thomas, regional director at Michael Page International. “In contrast, equity capital markets [ECM] teams are not hiring as much at all, because there’s been fewer IPOs [initial public offerings].”
Another area with strong demand for good people is compliance and risk. “The investment banks are continuing to ensure that their risk-management strategy is tight and in place,” Thomas says. “Then you’ve also got extra changes in legislation that have meant that they need to tighten up their compliance function again.”
Enticott confirms that recruitment in the compliance, audit and risk area continues to be strong. “Anti-money laundering [AML] within compliance is definitely a hot area within investment banking and the broader financial services industry,” he says. “The regulators are continuing to drive this need for the banks to ensure that they’ve got their compliance risk house in order. We believe that the demand in the compliance and statutory risk area will certainly continue in the near future.”
Burrage says that he’s seeing more action in the commercial banking (CB) sector as opposed to the investment banking (IB) sector. “Most of the activity we’re seeing is replacement and attrition, although the areas where there is definitely an increase in demand is compliance and risk,” he says.
Hong Kong, however, does not have enough good people to satisfy demand for corporate governance, risk management and compliance (GRC) positions, according to Thomas. “Compliance is one area that you can see we are bringing in candidates from external markets to work in Hong Kong for these roles because of the need to have experience,” she says.
Another emerging investment-banking trend is contracting. “Most of the investment banks have been very bold about wanting to build a contracting workforce,” Thomas says. “This can be quite painful when you first try to do it because the contracting pool in Hong Kong is actually very small. Historically, there’s not been a big contracting market. No one would have thought they would work for an investment bank as a contractor. It’s a very different mindset.”
Enticott agrees. “We have seen an increase in contracting and obviously this is a solution that is used in other parts of the world. It hasn’t been as common in Asia, but we are definitely seeing some form of increased demand in contracting requirements by the broader banking and financial-services system.”
Thomas believes that roles within investment banks have changed over the past five years. “They have become broader,” she says. “People are doing more with fewer resources. Banks need people who are adaptable, resilient, enjoy a large breadth of responsibility and are performance-orientated.”
Bank workers with expanded responsibilities looking for salary increments of 20 to 30 per cent are, however, being unrealistic. The average, at present, is between 10 and 15 per cent, Thomas adds.
Top investment-banking talent remains hard to find and a lot of firms are forced to search far and wide to find suitable candidates. On the front-office side, however, investment banks tend to look locally.
There is a good choice of talent in this area as candidates outnumber the amount of jobs available. The balance is slowly changing, however, because banks are increasing their hiring volume each quarter, “and they’re being very fussy about who they’re bringing onboard,” Thomas says.
Besides looking for a background in compliance, investment banks are increasingly focusing on Asia experience, which is a potential barrier to candidates from the US, Europe and Australia.
“Clients are basically saying that if they’re going to recruit for this position, they want someone who either has Hong Kong or Asia experience,” Enticott says.
He offers the following advice to potential candidates: “Do your research on the company you’re looking to move to. Make sure that the role that you’re going to do is going to take your career in the direction that you want to take it. Ask plenty of questions in the interview process, and not just generic questions.”
EMERGING BANKING JOB TRENDS
GOING OFFSHORE “They’re still very much doing offshoring of back-office functions and they’re not doing growth recruitment.”
MERGERS AND ACQUISITIONS “Hiring in M&As is continuing, particularly for people who are in the execution side of M&A deals.”
LISTINGS DROUGHT “[Equity capital markets] teams are not hiring as much at all, in contrast, because there’s been fewer [initial public offerings].”
HOT COMPLIANCE “The area in investment banking where we continue to see recruitment is really that whole compliance, audit and risk area.”
LAUNDRY JOBS “[Anti-money laundering] within compliance is definitely a hot area within investment banking and the broader financial services industry.”
CONTRACTING EXPANDING “Most of the investment banks have been very bold about wanting to build a contracting workforce.”
STAYING PUT “There is a trend that people would rather stay where they are at the moment in investment banking.”