Ratings agencies seek staff in Europe

While many investment banks and fund managers cut staff, at least one type of financial services is hiring. Ratings agencies in Europe say they are recruiting additional staff.

Moody's, Standard & Poor's and Fitch Ratings are all currently advertising a number of vacancies. For example, Moody's in Frankfurt is looking for a senior analyst for its corporate finance team, while Fitch wants an analyst for structured finance transactions, also in Frankfurt.

Fitch is also looking for a director to work on Spanish structured finance products in London. Louise Hollywood, head of recruitment in London at Standard & Poor's, says the company is recruiting 'across the board'.

Charles Prescott, group managing director of Fitch in London, says the ratings agencies sector is growing across Europe. 'In the US, the ratings agencies business is quite developed, but in Europe it is still quite new.

'Traditionally, a lot of European corporates were funded through bank loans. They are now going to the market to issue debt, and that debt needs to be rated.'

Andrew Farr, who heads recruitment in the structured finance group at Moody's, says recruitment reflects the firm's expanding workload. Moody's is recruiting for its offices in Paris, Milan and Madrid as well as Frankfurt, says Farr. Hiring is strongest in areas related to growth markets, such as securitisation.

In the past three years, Moody's has increased the number of analysts in its structured finance division in Europe from 20 to 105. Fitch employed 20 analysts in structured finance in London three years ago; now it has 87.

Ratings agencies rate the riskiness of bonds issued by corporates, financial institutions and governments according to their level of risk. Risk is determined by the probability that an issuer will go bankrupt before a bond matures, and how much bond holders are likely to receive if this happens.

When it comes to recruitment, ratings agencies do not themselves rate very highly in one area: pay.

Bruce Wheelan of the recruitment firm Andersons says credit analysts at ratings agencies typically receive half the pay of front office researchers in investment banks. It is not unusual for staff to defect from ratings agencies to banks.

Arjan Verbeek, a vice president at Moody's responsible for residential mortgage backed securities, left to join the asset securitisation team of Barclays Capital this month, for example.

Bonuses are responsible for the discrepancy. Someone with three or four years' experience, working in a specialist research role in a ratings agency, can expect a basic salary of 60,000 to 70,000, plus a 25% bonus, said Wheelan. In credit research, bonuses can be 100% of pay.

Working in a ratings agency can bring other benefits, however, including job security and independence. 'We don't make redundancies and we offer greater autonomy at work,' said Farr at Fitch.

Nevertheless, relatively low pay means ratings agencies typically recruit staff from middle office functions in investment banks, not from the front office. Wheelan says credit analysts from corporate banking are a popular source of staff.

For the corporate finance role in Frankfurt, Moody's is looking for someone with at least five years' experience as a credit analyst, as well as fluency in German and English, and ideally other European languages.

Analysts covering specific sectors usually also need specialist sector knowledge.

Although none of the big ratings agencies run graduate recruitment programmes, most employ junior staff on ad hoc basis. Entry level recruits are expected to have a good degree from a top college, and to speak at least two European languages.

In France, for example, Farr says most recruits come from the leading universities known as Grandes Ecoles.

At Standard & Poor's, Hollywood says junior hires should have a 2.1 UK degree or equivalent, and should have preferably undertaken an internship or some form of work experience in an investment bank.