eFC Briefing: Hiring and Bonuses Climb

WSJ story gives official recognition to two months' worth of anecdotes about employers tiptoeing back into the market. Meanwhile, some see a second quarter of bottom-line improvement and TARP repayments paving the way for bonuses to recoup last year's damage.

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A gradual uptick in confidence and hiring by large and mid-size financial players, evident to observers as far back as April, has gained enough momentum to generate a full-blown story in The Wall Street Journal. Among prominent data points: Bank of America says it's added "several thousand jobs" in response to increased mortgage refinancing. Goldman Sachs reports a "moderate uptick" in new hires in recent months. JPMorgan hired nearly 1,000 distressed-loan counselors in the past six months. The story touches several familiar bases. The hiring pickup is modest and patchy, is concentrated in business segments where current business is strong (such as such as restructuring, wealth management and credit), and partly reflects pent-up demand from companies that let go too many people over the past 18 months.

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Major global banks are on course to resume paying seven- and eight-figure bonuses this year, says BreakingViews. The predicted resurgence is credited to three main factors: Banks earned huge amounts trading debt in the first quarter, and the trend is continuing this quarter. Banks are paying back TARP and escaping related pay shackles. And, by pointing out they're spreading payments over several years and adding clawback clauses, organizations will be able to make $10 million payouts seem more acceptable to the non-financial public, BreakingViews asserts.

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Is the employment glass half full, or half empty? That's the question provoked by a lengthy investigative piece in Esquire's July issue, in which a writer tested the waters by posing as a job applicant. Richard Dorment applied to almost 300 seemingly randomly chosen job openings this past winter. His results should comfort job-seekers - in marked contrast to the negative spin put forward by both Dorment himself and another writer who recapitulated his saga for the 405 Club. He attained eight initial interviews (2.7 percent hit rate) and two second interviews (0.7 percent). That's not too shabby, given that the 29-year old editor purposely avoided applying to any openings he qualified for based on his publishing industry background. Dorment's numbers should be viewed as a minimum or baseline success rate, the proportions of first and second interviews available to anyone at all who cares to apply to an opening, regardless of experience.

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Big Canadian banks shed 4,000 jobs between the first and second quarters of this year amid declining profits. Here's how the cuts stacked up, according to Bloomberg. Royal Bank of Canada cut 1,109 jobs, or 1.5 percent of total staff. Senior employees, including four market presidents, also got the ax. Scotiabank cut 1,753 jobs, or 2.5 percent of total staff. Consumer lending staff layoffs in Chile and Costa Rica were planned while Canadian staff were laid off due to market changes, spokesman Frank Switzer told Bloomberg. Toronto-Dominion Bank cut 182 jobs, leaving 32,442 total staff. Bank of Montreal cut 1,100 jobs, or 3 percent of total staff. The cuts end a hiring trend among Canadian lenders.

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Are relatively low returns and a dearth of exit options indicators the venture capital industry should shrink itself by half? Yes, according to Paul Kedrosky, well-known investor and author of the widely cited Infectious Greed blog. In a study released this week by the Ewing Marion Kauffman Foundation, where he is a senior fellow, Kedrosky cites stagnating and declining returns coupled with rapid expansion in assets under management as evidence that the VC sector must shrink to remain viable.