Our predictions for financial services hiring in Scotland in 2009

It's looking pretty grim up north for Scotland's previously rapidly expanding financial services industry, but bright spots will still remain in 2009.

2009 WILL BE A HOT YEAR FOR...

Insolvency accountants

The Fraser of Allander Institute is forecasting that the Scottish economy will contract by 1.1% next year, resulting in the loss of some 37,000 jobs.

Inevitably, the number of businesses failing to survive the harsh economic conditions is likely to increase. However, one sector is rubbing its hands in expectation of a raft of new clients: insolvency accountants.

Certain firms in Scotland - such as KPMG and Johnson Carmichael - have already increased their teams and it's anticipated that other firms will follow suit.

However, David Bond, director of Edinburgh-based headhunter Cairns Bond, says firms will balance new headcount with transferring existing staff from other divisions.

"Other areas of the business are likely to be harder hit, so rather than make rash redundancy decisions, the likelihood is they'll look to internal resources for the insolvency and corporate recovery roles," he says.

Investment operations

The frenzied level of recruitment seen in the investment operations space in Scotland (which encompasses settlements, fund accounting, performance measurement and other back office functions) is unlikely to continue in 2009, but hiring will still remain relatively buoyant.

A quick glance at the Scottish Investment Operations website shows that a number of firms have recruitment plans that stretch into 2010 and others have revealed expansion plans for next year, says Margaret Dyer, director of Joslin Rowe Scotland.

"There's still new business coming in and they will need new people. However, I suspect we'll see an increase in temporary roles as permanent headcount will be harder to come by," she says.

Foreign opportunities

With Scotland's large financial institutions taking a battering in 2008, the word from Holyrood is that the country will look for global opportunities next year.

Scotland has already been touting itself as a low-cost destination with a high concentration of financial services expertise in Japan, and it is likely look for opportunities in destinations like China and India.

Scottish Secretary Jim Murphy said: "We can still be a world centre for financial services. As these new markets develop sophisticated financial services of their own, Scots can either teach them, train them or own them.

"My view is that of a unique sense of canny Scottish optimism, we should actually try to do all three."

2009 WILL BE A BAD YEAR FOR...

Redundancies

Sadly, it seems any redundancies incurred within Scotland's financial services industry during 2008 are merely the tip of the Iceberg.

The latest Ernst & Young Scottish Item Club report into the Scottish economy makes some very scary predictions for the financial services sector.

"The implications of a bigger shake-out from Scottish financial services could see a loss of 14,000 jobs from financial services (17%) over the two years to 2010, compared with a loss of 9,000 jobs (11%) in the more benign case," says Dougie Adams, economic advisor to the Ernst & Young Scottish Item Club.

Bonuses

Back and middle office bonuses in Scotland are hardly likely to create outraged headlines on the front of the Daily Mail. They typically come in at around 5-15% of a comparatively modest salary.

Nonetheless, Scottish bonuses are likely to suffer next year, reckons Dyer.

"I would think they will either be significantly less, or disappear entirely," she says.

Scottish banks

OK, so Scottish banks have had a dire 2008, but in terms of actually announcing the predicted number of job cuts, the worst is still to come in 2009.

In December, HBOS revealed that it had written down 8bn of bad debts this year, prompting speculation over just how toxic it will prove to be to Lloyds TSB.

The number of jobs predicted to go at the combined entity could number around 20,000, as Lloyds looks to save 1.5bn, and Scotland will inevitably shoulder a fair amount of these.

What's more, RBS is set to ask for a further 14bn in mortgage guarantees from government coffers.

Chief executive Stephen Hester's cost-cutting exercises may have only just begun.