eFC Briefing: Layoffs Yes, But Opportunities, Too

Layoffs and the threat of layoffs, but opportunities in Boston, Chicago and the Middle East.

The biggest names in alternative investments are feasting on top performers recruited out of investment banks. According to Bloomberg News, more than 45 traders, bankers, analysts and other executives have left the big banks this year, seeking greener pastures in hedge funds and private-equity firms such as Citadel, Tudor and <b?Apollo Management. Headhunters say the movement's pace has picked up as the expectations for bonuses and job security in the investment banking world continue to swing down.

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Newly appointed Chief Executive Robert L. Reynolds appears to have big plans for Putnam Investments, which could mean good news for job seekers. The former Fidelity Investments executive has outlined an ambitious agenda to boost the fortunes of Boston-based Putnam, including plans to add new products and bolster his research staff. Meanwhile, he's been quoted as saying "cost cutting is not on my agenda." In addition to making a number of executive hires, the firm is bringing on a number of juniors. On July 14, Putnam will welcome 20 new associates into its investment division through its Early Career Development Program, which is designed to recruit and train investment management professionals. And more positions need to be filled.

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Citigroup's investment bank began laying off about 10 percent of its global staff, or roughly 6,500 people. The Wall Street Journal said the cuts will be "unusual in their scope and severity." M&A bankers, who haven't suffered as many casualties as in other units so far, may see "especially sharp cuts," the newspaper said. Entire trading desks may go, and many senior managing directors may lose their jobs. However, some emerging markets and the bank's transactions-services unit may avoid much of the pain. Separately, the Financial Times reported Goldman Sachs may reduce headcount at its investment bank by a similar proportion over the summer.

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Changing technology is pushing Chicago's financial companies - particularly trading firms - to compete for engineers. In demand are professionals with network expertise, software programming skills and financial engineering backgrounds.

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Credit Suisse is reportedly preparing another round of layoffs centered in its investment banking division, including high-yield sales and trading and leveraged loans. The New York Post described the purported plan as cutting "muscle, not just fat."

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Lehman Brothers is reportedly facing a threat of mass defections by staff who fear new rounds of layoffs. CNBC reported some of the firm's executives view a sale of the bank as the main alternative to cutting as many as 5,000 of its 26,000 employees. Wall Street headhunter Jay Gaines told eFinancialCareers News he's had few calls from candidates from Lehman looking to jump. For recruiters, "The Street talent today is a prime target across the board," said Gaines. "There's the most vulnerability at Lehman. But we haven't seen people at Lehman panicking and calling en masse."

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Management changes within Credit Suisse's investment banking business provide the latest signal of the rising profile of emerging markets, the Middle East in particular.