Macquarie in a quandary as redundancy rumours make it a hunting ground
Australia's investment banking community is still holding its collective breath as to whether Macquarie will decide to trim its headcount this year and next. And the speculation is leaving it open to poaching.
Despite tough market conditions, Macquarie has increased staff by 46 per cent since March 2007, with its workforce now totalling more than 15,500. But it is now facing calls to shrink its numbers because its revenues remain under pressure.
Revenue per employee fell for five consecutive six-monthly periods until March this year - from $587,635 to $341,356, according to Bloomberg figures.
And the bank announced today that during the six months ended September 30, staff costs increased 26 per cent, driven mostly by overseas acquisitions. Net profit, however, fell 16 per cent compared with the same six-month period in 2009, further fuelling redundancy rumours in a bank which has traditionally aligned headcount numbers to business growth.
"It's a quandary for Macquarie. The bank is driven by its markets business, but if markets don't start improving soon, it will be stuck with these higher employment costs and lower revenues. Something will have to give," comments one Sydney investment banking headhunter who asked not to be named.
Macquarie has already made about 60 people redundant in its 590-strong infrastructure investment team, although some of them were support staff, such as secretaries. The bank says in its results that subdued markets have affected other divisions, including fixed income, currencies and commodities (FICC), Macquarie Securities Group and Macquarie Capital.
The firm has also lost several bankers via natural attrition to competitors this year, largely for compensation reasons. The danger now is that even if Macquarie does decide to reduce overall staffing costs, it won't want to risk too many key rainmakers walking out.
"It's not as competitive in the employment market as it was before the GFC and has now become a hunting ground for the other banks. Its younger staff especially lack loyalty, and Macquarie is finding it more difficult to retain people," says the headhunter.
