Banks scale back campus recruiting

A survey by GTI, a careers information company, found that the number of full-time vacancies for graduates joining investment banks in London in 2002 fell nearly 11% from 2001.

The cut was matched by a 23% rise in the number of applicants per vacancy. In 2002 there were 23 graduate candidates chasing every investment banking job.

Jobs were still available; the banks surveyed said they hired an average of 98 graduate trainees each.

Many have said that they recruited in 2002 in all the traditional areas, including fixed income, equities, corporate finance and IT.

But the figures suggested that investment banks were cutting back more than most employers. In a survey in May, the Association of Graduate Recruiters found that graduate vacancies for 2002 across all UK companies were expected to be down only 6.5%.

Graduate hiring is expected to be lower again in 2003. Vivienne Dykstra, head of graduate recruitment at Deutsche Bank, said hiring across the industry was likely to be down by a further 20%-30% next year.

She estimated that investments banks' 2003 graduate hiring would be as much as 40% lower than it was at the peak of the cycle in 2000.

Many graduate positions for autumn 2003 have already been given to promising undergraduates who did internships in banks last summer. The head of graduate recruitment at one US bank, which usually takes more than 100 graduate recruits, said that summer interns have taken all but 5 places for 2003.

CSFB has been telling undergraduates that it currently has no vacancies for next autumn. Places at CSFB are understood to have already been allocated to summer interns and to graduates who had been due to join this autumn, but deferred entry for a year while being paid part of their starting salary.

In this environment, some graduates are becoming more wary about an investment banking career. Yazann Rohami, head of the students' Investment Club at Cambridge University, said attendance at banks' recruiting events was markedly lower this term than in previous autumn milkrounds.

"Today it is the Procter and Gamble and Foreign Office events that are attracting all the people," said Rohami.

Nevertheless, graduates remain keen to apply to top firms. Rohami said Goldman Sachs' Cambridge presentation was 'packed out'.

Some banks have taken advantage of the hiring slowdown to sharpen their recruitment criteria. The Royal Bank of Scotland (RBS), which didn't specify minimum A Level grades for last year's applicants, now wants all of them to have at least 26 UCAS points (which can be reached with one grade A and two Bs).

Karen McKinley, head of graduate recruitment at RBS, said: 'There are a huge number of applicants for a small number of places. Most banks have increased their requirements.' Recruiters are also interested in students with second languages and students who have already undertaken banking internships, McKinley said.

Derek Walker, head of graduate recruitment at Merrill Lynch, said it is increasingly important that graduates can add value quickly: 'Our graduate intake are expected to follow a steep learning curve.'

He added there there was a growing preference for people with languages and previous sector experience.

Students focusing their efforts on firms outside the bulge bracket might have more chance of success. Tim Hughes, director of the ISMA Centre for financial markets at the University of Reading, said banks such as West LB Panmure are showing increased interest in graduate hires for 2003.

David Ainscough, a careers advisor at Cambridge University, said organisations such as Bank of America were worth considering because they were running against the cycle and hiring numbers there were up.

But finding out about some of the smaller banks can be far from straightforward. Although Dresdner Kleinwort Wasserstein is attending some 20 recruitment events across Europe this autumn, other European banks have cut back dramatically.

ABN Amro's graduate website indicates that it is visiting only Oxford and Edinburgh universities during the 2003 milkround in Europe. ING Barings is understood to have cut back considerably on student visits, and is relying increasingly on its website to attract applicants. The bank says it has 25 full time undergraduate positions and 20 internships in 2003.

One thing is certain: internships are increasingly desirable. Unless markets pick up, vacancies for 2004 are likely to be filled with undergraduates who were summer interns in 2003.

'It's becoming a question of intern or die,' said Rohami.

Banks are accepting applications for internships now. Students are advised to take note.