eFC Briefing: Muscles Flexed

Stifel, Nicolaus adds MD-level bankers for financial institutions and technology. Some hedge funds are hiring, especially creators of high-frequency, front-line trading applications.

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In the latest bit of muscle-flexing by a mid-tier investment house, St. Louis-based Stifel, Nicolaus & Co. added two senior coverage bankers. Kent Carstater joined Stifel's financial institutions practice and Doug Brockway joined the technology practice, both as managing director. Carstater was president of a private equity subsidiary of Resource America, Inc. Brockway was co-head of Innovation Advisors, a technology-focused investment bank, and previously founded and led SG Cowen's Boston technology corporate finance group. The hires mark the latest in a string of expansions for Stifel Nicolaus.

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Although most hedge funds lost money last year, the sector's hiring hasn't gone into lockdown. Despite a "huge slowdown" in overall openings and hiring, some fund firms are going against the grain by expanding staff, reports headhunter Kyle Ramkissoon of New York-based IJC Partners. And some smaller funds are looking to acquire top talent that was beyond their reach before the crisis. Particular areas of demand include risk management, compliance, and quants who can build high-frequency, front-line trading applications. Ramkissoon cautions, however, that "all of this is subject to change based on the redemption picture" in 2009.

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Hedge fund Glenview Capital reportedly laid off about a dozen staffers, or 15 percent of its 85-member staff, and warned survivors to expect reduced incentive compensation next year. The layoff victims are primarily back-office workers and administrative assistants plus "just a handful" of traders and analysts, the New York Post reports, citing unnamed sources. The story adds that base salaries will remain untouched but "performance-based pay for the investment team could be watered down as the company struggles to deal with a 50 percent drop in assets."

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New York law firm Thacher Proffitt & Wood said it's shutting down, another casualty of the meltdown in structured finance and real estate dealmaking. About half its 195 lawyers including Managing Partner Paul Tvetenstrand joined Chicago-based rival, Sonnenschein, Nath & Rosenthal, on Jan. 1. Thacher Proffitt led Thomson Financial's 2007 league table among U.S. law firms advising issuers of asset-backed deals and ranked third for mortgage-backed deals. As that business withered in 2008, it shrank from a peak of 350 lawyers to 195 before the latest departures. The firm also had substantial practices in banking and financial institutions, bankruptcy, compensation and benefits, distressed assets, investment management, and several other areas.

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Investment banks reportedly are narrowing their UK campus recruiting to an ultra-select circle of three to six elite universities this year, down from about 20 in past years. The Financial Times describes an "inner circle" comprising Oxford, Cambridge and Imperial College London, and an "outer circle" comprising the London School of Economics, University College London and Warwick University. Most major banks are actively recruiting from the inner group, while a subset are also recruiting from the outer group.

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Economy-wide job opportunities and compensation are set to contract further, leading consultants predict, and finance departments probably won't get a pass this time around. In one widely quoted report, Challenger, Gray & Christmas says more than 1 million jobs will bite the dust this year. Separately, Watson Wyatt found that 23 percent of employers surveyed in early December said they plan layoffs in 2009. Other cost-cutting measures are gaining ground, too: 19 percent of Watson Wyatt respondents planned to freeze salaries in the the next 12 months, and another 13 percent had already frozen salaries. Three months ago, those figures came in at just 12 percent and 4 percent, respectively. And 61 percent planned to "revise" budgets for merit raises - up almost threefold since October. (It's probably safe to assume "revise" means "reduce.")