Where do all the ex-bankers really go?

A black hole has opened up in the City of London. Figures from the Financial Conduct Authority Register show that 21,600 registered people have disappeared from banks and brokers since 2008. Where they have gone, nobody knows. More than 20,000 bankers disappeared, but the ranks of people registered with hedge funds swelled by fewer than 2,000 over the same period.

It's a mystery. Or is it?

There are more ex-bank traders in hedge funds than there seem

Regulatory lawyers say the FCA's figures substantially understate the number of people who left banks and joined hedge funds. "The FCA only requires registration for people who are dealing with retail clients," says Richard Everett, a partner at law firm Lawrence Graham. "A lot of hedge funds will be set up as onshore advisors to offshore structures. Those structures will be regarded as the client and so the people working for the fund won't need to be registered with the FCA."

Chris Arnade, an ex-Citigroup proprietary trader, said that in his experience most of his former colleagues who got out of banking have indeed gone to hedge funds. And most of them haven't got out anyway, he said: "Most of the people I know are still doing the same thing and working in banks."

Arnade was based on Wall Street (which may be why so many of his banking friends are still employed), so his ex-Citi colleagues wouldn't show up on the FCA register anyway. But one ex-trader with over ten years' experience heading trading desks at major banks in London who now works for a hedge fund in Mayfair, said Arnade's experience applies equally to the City: plenty of his former colleagues are now in the West End. Those who aren't are in very senior positions in banks and are bored with it: "There's no fun in banking any more," he complained.

The holy grail of non-executive directorship...

For senior bankers looking for the dual benefits of a nice income with a nice lifestyle, the ideal is usually a portfolio of non-executive director (NED) positions paying £20k-£30k each for a few weeks' work every year.  Some succeed: Alan Carruthers, former head of EMEA equities at J.P. Morgan, is now a non-executive director at Hydrodec, an oil and chemicals company, for example.

John Tattersall, a former partner in the financial services regulatory practice at PricewaterhouseCoopers, has a whole host of financial services board memberships and non-executive directorships to his name. Tattersall is an NED or board member for six different companies, including UBS Limited and Northern Rock. However, it's not so easy for ex-bankers to get NED positions in the financial services industry, he told us: "They're too conflicted." It's more feasible for sector-focused bankers to become NEDs for companies in their area of sector specialism, said Tattershall, but even this is far from guaranteed.

And the reality of entrepreneurialism...

Deprived of NED roles, many ex-bankers and traders instead end up being entrepreneurs, with various irons in their fires. One ex-equities trader now has four different business cards, including a country pub, a solar panel company, and hedge fund consulting. "My friends in the City joke that they'll come and work with me when the solar panels business takes off," he told us.

Heather Katsonga-Woodward, a former junior banker from IBD at Goldman Sachs, left banking to set up various different web-based businesses. One, Neno Natural, a company focused on natural hair products for black women, has come good.

When we spoke to Katsonga-Woodward, she was about to do an interview with a South African radio station. "It was an accident really. I started blogging about natural black hair which hasn't been chemically straightened and I built a huge following. It's a market with very big potential," she said.

For the moment, Katsonga-Woodward produces her own range of hair oils. Ultimately, she wants to launch a range of shampoos and conditioners. Many of her customers are in the US and she uses a fulfillment company to mail the products out to them. "I make a living out of it and soon I'll overtake what I made in banking," she said.

The flexibility of being able to work anywhere she plug in a laptop is the best thing, said Katsonga-Woodward, who added that she's been working shorter days recently to make the most of the clement weather. "My friends who are still in banking joke that they want me to hire them when I'm making enough money," she said. "They're not having any fun any more. Banking used to be a great industry, now it's so over-regulated that everyone wants to get out."