Will RBS be the only bank hiring after July?

After two completely dysfunctional years when it comes to financial services hiring, 2010 is looking a little more normal.

For anyone who's forgotten what normal looks like, that means lots of hiring in late Q1/Q2 after bonuses have been paid, some replacement hiring in early Q3, and very little hiring at all (unless it's junior staff or anyone in the middle or back office with a nominal bonus) in late Q3 and Q4.

Needless to say, the 'normal' cycle is entirely due bonuses. The later in the (financial) year that you hire someone, the bigger the bonus that you have to buy out. With financial years mostly similar to calendar years, hiring has therefore traditionally been hot in spring, cold in winter.

Even though salaries have been hiked and bonuses are (supposedly) smaller, the old cycle appears to be reasserting itself.

"We will see a big drop off in the amount of hiring that takes place from the end of June," says Zaheer Ebrahim at Kennedy Associates. "Generally senior level bankers have three month notice periods and it is uneconomic if they only come on board from September, but have had their bonus bought out for the full year."

The head of investment banking search at another international headhunting firm says this is the first time since September 2008 that hiring hasn't been purely reactionary. "We're getting to the stage now where banks are able to stop, evaluate, and to do some proper strategic planning," he says. "For banks with December/January year ends, we're expecting hiring to stop in July.

"New projects and headcount will be allocated in Q3 and Q4," he predicts. "But for cost reasons, hiring related to these projects won't happen until Q1 of next year."

RBS: second half surge?

The exception to this rule is likely to be RBS.

As we have noted on past occasions, RBS is paying out 50% of its 2008 bonuses and 50% of its 2009 bonuses this June.

According to various headhunters, this is making its people extremely expensive to poach now, but will make them extremely easy to poach in a month or so's time. "There will be a mini exodus out of RBS in June," predicts David Reynolds at search firm Scott Reynolds Partners.

If so, it could prove very bad news for RBS, which may find itself obliged to fill gaps with staff hired from competitors who will want their bonuses to be bought out for the full year.

The fact that the UK's coalition government is making nasty noises, along the lines of, "banks that have been rescued by the government will be the servants, not masters, of the economy," isn't likely to make replacement hiring any easier or cheaper.