Suddenly, solutions businesses are all the rage

One thing was notable in the investor presentations made by banks last week: 'solutions' are the new black.

Hence, UBS said 'FICC Credit Solutions' are "very attractive," even while FICC Complex Structured Products' are resolutely, "not attractive." And Goldman Sachs identified client-focused, 'risk management solutions' as an important area for the future.

Is now, therefore, the moment to get the S-word into your CV? As someone noted in response to our UBS article of last week, it would suddenly seem sensible to change the word 'structured' to 'solutions' wherever it occurs.

Unfortunately, increasing your employability may not be that simple. Fixed income headhunters say banks have been into solutions for ages and there's unlikely to be much hiring here. "Intellectually, solutions can be interesting, but the revenues tend to be volatile and lumpy," says one.

It doesn't help that 'solutions' means different things in different business areas and different things at different banks. Credit solutions generally refers to advice provided by investment banks to other financial services companies (insurers, asset managers, retail banks), to help them adjust to new regulatory rules. By comparison, the corporate-focused 'client risk solutions' referred to by Goldman Sachs are more about advising clients on tailor-made hedging strategies.

What the new 'solutions' businesses do generally have in common, however, is that they use a lot less balance sheet than traditional structured products. Solutions are much more about matching buyers and sellers of tailored risk products and much less about banks taking uncollateralized unsecured positions themselves.

"The investment banks simply find a counterparty and end up being an intermediary," says the head of one fixed income search boutique. "They're not hiring anyone for these solutions businesses, but they are able to use them to retain some of the structuring staff who've been working on long-dated derivatives products and would otherwise have lost their jobs."

Another fixed income headhunter says working in a solutions team is no panacea for job loss, however. "'Client risk solutions' is similar to 'corporate risk management', where banks have been laying off loads of people in the past year or two," he says. "A lot of this stuff can be done electronically now - if clients are just hedging out vanilla products, they can use electronic platforms. Investment banks don't need any staff to do this."