New year brings in applicant rush

After a dire year in 2002, there are signs that many financial services employees want to move.

Job-hunting in January is nothing new. Time to reflect on working life during the Christmas holiday is one reason, but this year financiers are keener than usual to jump ship.

Deborah Dor, managing director at headhunter Mantaray, says: "There is much more volatility than in previous years. Candidates in performing teams who worked hard and completed several deals in 2002 are, in some cases, being offered bonuses an average of 25% lower than the previous year. Many are wondering if they would be more highly valued elsewhere."

Sean Springer, chief executive of headhunter Napier Scott, says at least a third of staff in equity capital markets are thinking of moving. "There is a lot of dipping the toe in the water. People want to know what other opportunities are available."

Visits to jobs websites reflect the level of disgruntlement. EfinancialCareers.com, Financial News' careers site, had 25% more visitors in the first two weeks of January than during an average week last month. Other sites report similar restiveness: at Cityjobs.com, visits are up by 10% compared with a typical week last year.

But job seekers will be thwarted by a lack of available posts as firms are suffering from overcapacity in many areas. Some aspirations will be particularly hard to meet; corporate financiers with a bent for private equity are unlikely to succeed, particularly if they have been made redundant.

Guy Townsend, managing director at recruitment company Walker Hammill, says he had a rush of CVs from would-be private equity professionals when banks reduced staff in corporate finance departments last year. He expects another bundle of applications if there is a further round of redundancies in March.

Corporate financiers should save their printing costs, he says. "The truth is that private equity firms want the absolute tiptop person. If you are culled, you are not going to walk into a job in private equity."

There is disagreement between recruiters over whether many more corporate finance and mergers and acquisitions specialists will face the chop in 2003.

Guy Davies, managing director at search firm Hogarth Davies Lloyd, thinks they will: "There are generally still too many people in product areas such as corporate finance and equity research where we expect further fallout in 2003. Some clients are viewing this opportunistically, however."

Maria Wallace, a corporate finance specialist at the Rose Partnership, thinks otherwise: "Banks have downsized corporate finance departments dramatically. They are now the right size for the market."

Headhunters agree, however, that fear of further redundancies is prompting staff to look at what is on offer. Fund managers escaped relatively unscathed last year and there is speculation that the axe may fall more heavily this year.

Petra Rickmeyer, director of financial services at recruitment firm Hoggett Bowers, says that if markets remain weak, sales and marketing functions, as well as managing of funds, could be outsourced.

In some areas, job searchers believe there are better opportunities at other firms. Lee Thacker, head of the European fixed-income practice at the Whitney Group, says high-quality structured finance professionals are more than usually willing to move.

"People who weren't interested in moving last year now want to know what's on offer," he says. This is the result of poor bonuses and fears that some banks are not committed to providing capital support for high-risk products.

Movement is possible because structured finance is a sector where hiring is relatively buoyant.

Mantaray's Dor says hiring restrictions have been relaxed at some firms. "In areas like commercial mortgage-backed securities, whole business and collateralised debt obligations, and in areas of asset-backed securities (ABS) distribution, many clients now have new budgets which are enabling them to hire the people they were looking at last year," she says. One bank is looking for seven ABS specialists.

Headhunters say hiring is particularly strong in the Italian and French structured finance markets. A Milan headhunter says: "The Italian government is reducing its budget deficit by securitising its real estate portfolio. This will be one of the stronger hiring areas in 2003."

Moves to new pastures are also possible in prime brokerage, the service banks offer to hedge funds.

Greg Patel, head of capital markets recruitment at Norman Broadbent, says: "Prime brokerage and structured equity finance is one of the areas where recruitment is definitely happening. Although some small hedge funds have closed down, there is still a net inflow of money into the sector and the prime brokers that service it need new staff."

Banks including JP Morgan are expected to establish prime brokerage activities this year, and HSBC may also venture into the market. ABN Amro, Bear Stearns and Citigroup could boost their European prime brokerage activities, and Merrill Lynch's hire this year of Donald Pepper from Goldman Sachs to head its European prime brokerage activities may be a portent.

Organisations wanting to make hires are advised to do so soon. Judith Mills, a career consultant who works with investment bankers, says that just as resolutions are soon forgotten, determination to change job quickly subsides.

She says: "Wanting to get a new job wears off by mid-January. When people are busy they don't have time to think about what else they might want to do."