Any new front office hiring this year hinges on a benevolent CEO

In times of crisis, it's not unusual for any expensive hires to undergo a more onerous sign off process. Now, however, decisions are increasingly being taken at the very top for any vaguely senior front office recruitment.

At banks undergoing a prolonged period of restructuring, recruitment has become a long journey. Lloyds, for instance, has a panel of senior executives called a "cost board", which must give the thumbs up to any key hires.

Now, investment banks in the City are relying on chief executives to sign off new front office hires and, generally, they're reluctant to do so, suggest headhunters.

"Rather than going to the head of investment banking, in recent weeks any senior front office hires have to be signed off by the CEO," says Jason Kennedy, managing director of search firm Kennedy Associates. "Because they're focusing on cost efficiencies across the group, they generally want to hold off until the new year for expensive investment banking hires. Instead, existing employees are being given more responsibility, usually without an increase in base salary."

Any front office hires "north of 300k" packages have to get the nod from either the CEO or COO, says Lee Thacker, partner at headhunters Silvermine Partners.

"Most banks want to identify people for cuts, and get the restructuring out of the way before considering any new hires - either replacement or upgrading," he says. "Redeployment is an option for some, but most hiring managers would rather cancel the role than compromise by taking an internal recruit who wasn't perfect for the job."

This is not entirely surprising. Aside from the political dimensions of recruiting while making extensive redundancies, it's also questionable about whether the worst is over for investment banks.

Financial News has produced a grim assessment on the state of investment banking revenues for the third quarter. It suggests that fees in August slumped to $523m in Europe, 46% down on last year and the lowest month since 1997. Equity and debt capital markets revenues, in particular, have taken a beating.

This follows its report last week, which said the second half of 2011 would be worse than the first. In such circumstances, recruitment takes a back seat.

What about the junior ranks, though? It's been suggested that more experienced bankers are being targeted for cuts, while less expensive analysts are generally being spared. What's more, as we suggested last week, more and more bankers are leaving for the buy-side.

"More people are leaving investment banks, but unless they're a must-have replacement, there's very little new hiring," says one partner in a headhunter focused on junior front office recruiting. "July and August were very busy for junior front office hiring, but this was mostly legacy and the pipeline for new recruits has slowed in recent weeks."