Global custody hiring surging ahead
It may not be a repository of the most exciting and well paid jobs in financial services, but when it comes to sheer appetite for staff, there is little to rival the global custody industry.
As things stand, the custody industry already employs tens of thousands of people globally. At the end of last year, Mellon Financial Corporation, one of the world's larger custodians in terms of assets, employed a total of 16,700 people globally. Bank of New York, employed more than 24,000, and Northern Trust, another custody heavyweight, totalled around 8,000.
While some of these staff were engaged in alternative businesses, such as private wealth management, many were engrossed in tasks related to asset servicing. And more will be needed in future. Northern Trust saw its payroll expand 12% in 2005, and Mellon saw employees rise 7%. Recruiters say the industry's appetite for staff continues unabated.
"We're extremely busy across all of our key markets," says Laura McGriskin, head of investment management hiring at recruiter Badenoch & Clark in London. "There are skills shortages in all areas related to asset administration."
Recruiters elsewhere report a similar trend. "Custody jobs are growing," says Brian Drum, head of New York City-based Drum Recruitment. "State Street, Misys and Bank of New York are all hiring and there's a definite lack of people to fill the roles."
"We're seeing huge demand," says Jean-Marc Benker at recruiter Robert Walters in Luxembourg. "An increasing number of funds are settling here."
Scotland, Ireland raise headcount
What can be said of London, New York or Luxembourg, is equally true of other key custody centres, such as Scotland and Ireland. A recent survey of Scottish financial services companies by Joslin Rowe found 43% were planning to increase headcount in asset administration during 2006.
"Asset administration companies in Scotland are focusing on training existing staff and moving people from other sectors and industries," says Margaret Dyer at the Edinburgh office of Joslin Rowe. "There simply aren't enough experienced staff to go around."
The bad news for anyone hoping to hop into a custody job in somewhere like Milan or Frankfurt, is that demand for staff in custody hotspots isn't necessarily mirrored in smaller markets. Italian custody vacancies are rare according to Maximilian Redolfi at Michael Page in Milan.
They may, however, crop up with greater frequency in future. Société Générale Securities Services (SGSS) last week acquired Italy's second largest custodian, 2S Banca. 435 staff, of which 376 are based in Italy, will be transferred to the new owner. Etienne Deniau, deputy head of investor services at SGSS, says there are no plans to make redundancies, and additional hiring is likely in future. "Assets under custody are rising all the time, and we expect to add staff in the Italian market," he says.
Feeding the frenzy
As Deniau suggests, rising assets under custody are one source of roaring recruitment. Custody hotspots are at the forefront of the rise. Dublin, for example, saw funds under administration rise some 23% last year, to more than $1 trillion.
Hedge funds are adding to the fray. "A lot of hedge funds are outsourcing their back office," says Drum in New York. "At the same time, custodians are developing new products and adding to their processes."
State Street Global Advisors is among those expanding its hedge fund servicing capabilities. Earlier this month, it announced plans to quadruple its UK hedge fund staff from 10 to 40. Meanwhile, Mellon is expanding its hedge fund administration subsidiary into Ireland and in the US, JPMorgan has just agreed to buy the middle and back office operations of Paloma Partners Management Company, the hedge fund services business.
Growth in the hedge funds sector is creating demand for staff familiar with complex derivative products and hedge fund accounting practices, who are predictably hard to find. Drum says knowledge of credit derivatives comes at a particular premium.