Battered Investec is still hiring

Investec has taken a hit. Loan impairments and defaults have risen, and prospects are less rosy as South Africa, which still accounts for two-thirds of the bank's income, battles with its first recession in 17 years.

But rather than battening down the hatches, the London-listed South African bank is still hungry for growth. Managing director Bernard Kantor says the financial crisis is a "strategic opportunity to capitalise on."

Investec, which has a strong capital base, is keen to grab market share from rivals. Indeed the bank's behaviour in the UK in the last few weeks could be a case study in how to exploit others' woes and weaknesses.

Along with Nomura and Evolution, Investec has been carving up the investment banking division of Dresdner Kleinwort after Dresdner Kleinwort was taken over by Commerzbank. It's has managed to poach an entire 10 person team from DK, including former managing director Chris Treneman, according to whom the good thing about the South African bank is that "all the bankers and brokers have the same agenda, namely to build an enduring, high-quality mid-market advisory/broking franchise, a luxury my colleagues in 'fallen star' and other mega banks cannot enjoy."

Investec is selectively hiring in South Africa as well. Unlike other local banks, SA spokeswoman Ursula Obrega says it does not have a hiring freeze on: "We have a natural attrition rate of around 15% and in some divisions like the lending areas we are not currently replacing people who leave. But we are actively recruiting in other divisions which are growing, like retail deposits and wealth management." Last year Investec started offering retail banking in South Africa, the UK and Australia and it is seeking to grow in all three markets.

On the remuneration front, CEO Stephen Koseff warns that "bonuses are sure to go down this year". However, Investec has had a risk-adjusted model in place since long before the crisis, which means that each division has to earn a certain return on capital before they get a bonus.

With overall earnings down 25%, therefore, the average bonus will inevitably drop this year, even if some divisions which have done well will buck the trend. "We are following a well-established pattern," says Obrega. "The only change we have introduced is a deferred payment in shares for part of the bonus."