UK banking group Barclays has applied the brakes to the frantic recruitment drive at Barclays Capital, its investment banking subsidiary, which specialises in fixed interest and derivatives.
BarCap added 1,300 jobs worldwide in the first seven months of this year, taking its payroll to about 7,000.
This expansion formed part of a plan to add 3,000 jobs over three years put in place by Bob Diamond, its American chief executive. He lost out last year to John Varley in a battle to succeed Matt Barrett as head of the group. Barrett became chairman and Varley chief executive last week.
Recruitment sources said BarCap has imposed what one called a 'tentative hiring freeze', while continuing to recruit in selected specialist areas, after spending large sums on new hires in recent months. BarCap is understood to have spent several hundred million dollars. Diamond is on holiday and could not be reached for comment.
'BarCap has been the most aggressive hirer in the market this year, paying way above premium to new hires, with lots of deals involving guaranteed bonuses of around two years,' said a source. Stories of young proprietary traders offered pay packages of more than 1m (€1.5m) have attracted recruits while deterring their previous employers from trying to keep them.
BarCap denied a clampdown was in place. 'We have not put in place a hiring freeze and we are continuing to recruit, as we are still going to grow the business globally,' said a spokeswoman.
However, a source at the bank said: 'There is not the frantic rush to recruit and, though hiring continues, it is not at the same pace. It takes time to take stock of the new hires after the big influx in the first two quarters.'
One observer suggested BarCap might prefer to avoid paying recruits their potential 2004 bonuses by waiting to hire them until next spring, when they will have collected bonuses from their present employers.
As part of his ambitious expansion plan, Diamond boosted his internal recruitment division and brought in Mike Clarke from Royal Bank of Scotland to head it. BarCap's expertise lay in sterling bonds and treasury, but Diamond has been keen to expand in the US in high-yield bonds, energy trading and mortgage-backed bonds, as well as extend the European bond and derivatives business.
BarCap has conducted some well publicised recruitment raids, including hiring a team of three bond salesmen, led by Omar Selim, from Credit Suisse First Boston, in Frankfurt in May. It repeated the trick a month later, recruiting a five-member team from the Swiss-American bank that specialised in Nordic debt and derivatives.
Naquib Kharaj, Barclays' finance director, suggested this year that BarCap would find it difficult to repeat its record first-quarter income in the rest of the year. The subsidiary reported interim pre-tax profits of 599m ($1.1bn), an increase of 438m on the same period last year. The investment bank's contribution helped Barclays Group pre-tax profits rise 23% to 2.4bn.
BarCap has recently been linked with a possible bid for Cazenove, the UK independent broker that is being courted by JP Morgan Chase and Lehman Brothers.