If you're a financial services professional hoping to land a job in a bulge-bracket institution, your prospects just nosedived. And if you've been aiming for a slot in a hedge fund or in one of the many boutique banks that are still hiring, get ready for a flood of new competition.
Monday's bankruptcy filing by Lehman Brothers Holdings and the surprise deal for Bank of America to acquire Merrill Lynch will each trigger mass layoffs, Wall Street headhunters told eFinancialCareers News. Although it's too soon to estimate how many jobs will be lost in the restructuring of Lehman and the absorption of Merrill, the past weekend's stunning developments further reduce opportunities for most professionals to make a career move, in an industry that has been shrinking already.
"There will be fewer top-tier U.S. banks to work for," notes Steve Yendell, a director at Selby Jennings, London-based finance-sector search firm. "This is also a massive sign that the problems are still very real and they're still being felt by some of the biggest players in the market place. "
"The market is going to be flooded" with candidates, says Jay Gaines, chief executive of Jay Gaines & Co., a Wall Street-focused headhunting firm. "In the short term, the employment picture is going to be ugly."
Lehman U.K. Staff 'Might Not Get Paid This Week'
Sources cautioned that the picture is still in flux - especially at Lehman, whose asset management and broker-dealer subsidiaries were not included in the parent company's Chapter 11 bankruptcy court filing in New York early Monday.
Individual Lehman employees face dramatically different consequences, depending on which subsidiary they work for. The bank's U.K. staff might not get paid this week, according to PricewaterhouseCoopers, the court-appointed administrator in London for Lehman's European operations. PWC officials told a press conference Monday that Lehman had been controlling all overseas cash on a daily basis from its global treasury function in New York, and might not have enough to make this week's $75 million payroll for the U.K. units. The status of U.K. staffers' accrued bonuses, and even defined benefit plan claims, could be threatened as well. Still, MarketWatch says "only a few dozen employees were immediately terminated" in the U.K., and some Lehman staff may remain "for months."
On the opposite end of the spectrum, Neuberger Berman and Lehman Brothers Asset Management continue operating normally, as the parent continues talking with potential buyers for its investment management division. Lehman "is exploring the sale of its broker-dealer operations and, as previously announced, is in advanced discussions with a number of potential purchasers to sell its Investment Management Division," the company said.
Merrill's Support Departments May Bear Brunt of Deal
As for Merrill Lynch, Gaines believes the heaviest job cuts are likely to fall within the "infrastructure" area, where there is duplication with Bank of America. "I'm sure they (B of A) are going to be aggressive about squeezing the costs out, because both institutions took some hits in the crisis," Gaines observes. B of A will probably keep using Merrill's brand name, he adds. Within investment banking, he says B of A has been strongest in fixed-income, with fewer capabilities in equities. Merrill, meanwhile, has a solid presence in equity underwriting and trading.
Gaines says Lehman was very strong in electronic trading, markets and distribution - so any Lehman staff from that segment may find other employers receptive. Other Lehman areas of strength he mentioned include analytic finance, risk management, business strategy groups within fixed income and equities, and infrastructure functions such as finance, IT and operations.
Comparing the challenge facing Lehman and Merrill employees with the aftermath of JPMorgan's purchase of Bear Stearns in June, Gaines says, "My sense is that the Bear people did very well" in finding new employment. "I think we're really going to see a redistribution of people," he comments. "But, the Bear guys were the first guys on the block en masse. Now we're being hit with layoffs across the board."