RBS has hired 300 investment bankers since December and 800 since last year, but maintains that investment banking is NOT a growth industry
RBS has emerged as one of the greatest hirers of the first quarter.
The bank's results, released today, belie its enthusiasm for hiring into its investment bank.
In the first quarter, headcount increased by 300 people. This is impressive, given most banks haven't done much net hiring recently.
Only UBS hired more people than RBS, with a net addition of 465 investment bankers. Goldman and Deutsche both performed a net cull.
Who are these people? Headhunters say they're not in equities. Nor are they apparently in investment banking. There were expectations of an investment banking build out following the arrival of John McIntyre last year, but everything has allegedly been put on hold in the light of the deputy chief executive's skiing accident and subsequent shakeup of the executive team.
That leaves the back and middle office, FICC and - specifically - IT. In the call accompanying today's results, the bank spoke highly of its emphasis on technology and its improvements in risk.
But will everyone leave in June?
The danger for RBS is that lots more people leave its Global Banking and Markets Business in June once they receive a large portion of this year's bonus.
Headhunters offer mixed prognostications on the likelihood of this happening.
"Everyone who was going to leave has left already and the good people are guaranteed," says one. "There's a constant flow of mid-level people who want to get out of there, and it's speeding up as June approaches," says another.
RBS appears to be paying less this year. Compensation per head in GBM was 45k for the first quarter, vs. 48k for Q1 2010.
Unpromisingly, and despite the hiring, Stephen Hester was also keen to emphasise that investment banking is not a growth business. "Real top line growth is going to be a real struggle," he confessed in today's call, claiming that his focus was mostly on the increased capital intensity that's in the pipeline.
However, one investment banking headhunter with senior contacts at RBS maintains there is more to this than meets the eye.
"The reality is that Hester would really like to build a full service investment bank, and to leverage their existing relationships with corporates, but there's extreme pressure from the government not to," he alleges.
