SA brokerages: too much of a good thing?
The good news is that international banks' interest in South Africa has increased. Johannesburg is seen as the gateway to Africa and Africa is seen as the continent of opportunity. The not-so-good news is that the field is getting crowded and everyone is chasing after a very small pool of top talent.
The world's leading international banks are either planning to operate brokerages in South Africa or are already doing so, like Deutsche Bank, Hsbc, JPMorgan Chase, Citigroup and BofA Merrill Lynch.
"It is fantastic to have the interest from abroad, but the influx of a number of new players will add pressure to an overbroked market place," says Phryne Williams, director of Capital Assignments, a Cape Town-based financial services recruitment firm. "The SA market is already taking huge strain with regards to the flow of brokerage. There are new entrants like Renaissance Capital and Absa Capital and there is talk of Goldman re-entering as well. In addition, Merrill is rebuilding its team, with the hub of the team being Cape Town-based. All this is placing huge strains on the revenue flows as well as overall team stability. There just aren't enough senior analysts to go around."
The African market, not just the South African one, is fast becoming a land of poachers. "Growth into Africa is at the forefront of many international banks' agenda at the moment but from a recruitment perspective there are many hurdles to cross in the process," says Janene Brown, consultant at Anton Apps recruitment services in Johannesburg. "It is often imperative to hire African locals for specific roles but this is easier said than done as the pool of expertise in certain countries is limited. This does lead to poaching from other banks but this is not unusual in the African market anyway."
The intense competition for talented staff is creating problems and driving up salaries, says Williams: "The constant movement of the analysts is very unsettling to the industry and to the broking firms that are losing staff and gaining new staff. The game of musical chairs also causes pressure on the competing companies to increase salaries in order to retain their valued people, in turn putting pressure on overall remuneration."
She adds: "I believe that a more sustainable strategy would be for broking firms to have the budget to enable them to bring in more junior analysts. This helps the companies to withstand the loss of senior analysts and it bolsters the industry as a whole. Because of the decrease in revenues, it is not always possible for companies to have strong junior staff that are being trained and mentored by senior analysts. The sudden instability due to the influx of new players does cause an unusual pressure on an already strained industry. The last time this happened was after deregulation, but the economy was in a different place then."
