Mixed signals in recruitment drives

Bank of America, Barclays Capital, Commerzbank, ABN Amro and Deutsche Bank are among those which say that their graduate intake in London in autumn 2002 will be higher than this year.

They are already having to think seriously about how much hiring they will do, as their visits to the universities take place over the next few weeks. Offer letters will start going out in a few months after interviews have been completed.

Banks have many reasons for wanting to recruit more graduates. At Barclays Capital, Vincent Thomas, head of graduate recruitment, says that plans for higher numbers are the result of the bank's strength in the still-growing debt and credit markets.

Commerzbank wants to change its culture by bringing in raw young recruits. Until recently it hired only seasoned bankers. Bank of America's structured graduate hiring programme in Europe begins in 2002.

ABN Amro will hire more graduates despite plans to cut its investment banking budgets by 20% in the next three years. Deutsche Bank points to the continued strong demand for new blood in sales and trading, and technology.

However, with the exception of Deutsche Bank, which expects to hire in the region of 1,000 graduates globally in 2002, these are not the big boys of the graduate recruitment world.

ABN Amro plans to take on only 100 recruits globally. At 35 and 50, prospective numbers are lower still at Bank of America and Commerzbank. Barclays Capital anticipates more than 200 graduate hires in 2002.

This is small beer compared to the 500 or so graduates that Goldman Sachs was planning to take on in London alone this year, when questioned on the subject at the end of 2000.

Graduates' prospects depend largely on the plans of a few big hirers: Goldman Sachs, Merrill Lynch, Morgan Stanley, Credit Suisse First Boston, Salomon Smith Barney, JP Morgan and Deutsche Bank.

It was these banks that blew the lid off the graduate recruitment market in 1999 and 2000, causing pay packages to rise from 26,000 (€42,0000) to 35,000, plus a signing-on bonus, often of several thousand pounds. It is these that will determine whether the market for graduates in investment banking stays buoyant or collapses.

Goldman Sachs is inscrutable when it comes to future plans. 'This is a key area and we remain 100% committed,' said a spokesperson, while refusing to divulge any figures. Elsewhere, there are indications of a marginal reduction.

'Graduate numbers will be slightly down or static,' says Rebecca Neale, head of graduate recruitment at Morgan Stanley. 'Numbers may be down a bit, but not massively,' says Derek Walker, head of graduate recruitment at Merrill Lynch.

However, logic would suggest that hiring in the bulge-bracket is likely to be down quite a bit. M&A powerhouses such as Goldman Sachs, Morgan Stanley and Merrill Lynch have been badly affected by the slowdown. If numbers at these houses remain static, it will be because graduates are viewed differently to more senior hires.

One recruiter at a large bank said: 'Just because you are pruning dead wood, doesn't mean that you don't sow seeds. Recruiters should always be on the lookout for fresh talent.'

Neale at Morgan Stanley is more prosaic: 'Graduate recruiters must look to the future succession planning will be irrevocably damaged if we don't.'

The prospects of graduates at banks are undoubtedly improved by the fact that graduates are cheap, and that by the time they become really useful in two or three years time, market conditions may well have improved.

This feeling no doubt explains why the investment banks have not followed the example of PricewaterhouseCoopers, the accountancy firm, which rescinded offers of jobs to 78 graduates due to arrive this autumn.

Accenture, the management consultancy, has told some of its graduates not to come into the office for three months as there is not enough work for them to do.

MBA entrants to banks do not enjoy the advantages of graduates. Jackie Moylan, head of graduate recruitment at ING Barings, says: 'MBAs are an expensive commodity that comes with high expectations. In the current climate the business has decided to concentrate its efforts on the graduate market, as they can be brought up to speed quickly.'

The vulnerability of MBAs to changes in the business cycle is confirmed by recruiters at other banks. However, difficult conditions may actually benefit students at European schools. One recruiter says: 'When we are looking at costs, students at London Business School (LBS) have a definite advantage. It costs 1.50 to get to LBS on the tube, but 3,000 to fly business class to Chicago.' Nevertheless, careers advisers at Europe's leading business schools are preparing students for a tougher recruitment round next year.

'We are hearing from recruiters in banks that they will be looking for fewer people,' says Marie Boss, director of the careers department at Insead. As a result we are telling our students that they have to really know the market: find out which banks are recruiting, and in which areas. They need to research each bank's hiring needs in depth.'