Watch this: it is the magic fairy dust that will get you a job in banking
If you're trying for a job in banking and struggling to snare that elusive beast, then - hey - YOU ARE NOT ALONE. Banking is a competitive industry: at graduate level there are 135 applications per place. At experienced levels, the number of jobs on offer seems in slow but terminal decline - in the City of London, the number of available finance jobs fell 27% year-on-year to 2,980 in July 2013 according to recruitment Astbury Marsden. 2,980 available jobs are ok, but woefully inadequate given that 69,000 City jobs have reportedly disappeared in the City since 2008.
What's up with the banking jobs engine?
One word: regulation. Banks are so busy trying to sort out their balance sheets and so busy trying to raise new capital to meet new regulatory requirements, that they are only willing to hire for the most profitable areas, says Astbury Marsden. All other hiring is on hold.
Aside from a serious relaxation in capital requirements (which clearly isn't going to happen), what can get banking recruitment chugging along steadily again?
Two words: IPOs and rights issues. For hiring optimists, the initial public offering (IPO) market is an important driver of banking recruitment. So too are rights issues (when companies already floating on a stock exchange issue more shares to raise more money). With enough IPOs and rights issues, the drag of regulation might even be defeated!
Astbury Marsden suggests as much in the press release accompanying its verdict on July's City job numbers. It notes that IPOs rose 58% in Europe in the second quarter, that the economic recovery is gathering momentum and that - were it not for regulation, the rush of IPOs would be encouraging a rush of recruitment in banks very soon.
There are several reasons why IPOs are a sort of magic-fairy-dust-growth-hormone for bank hiring. Firstly, they create demand for equity research and equity researchers. Secondly, they create demand for equity salespeople and traders. Thirdly, they create jobs for people working in banks' capital markets businesses. Fourthly, they allow companies to raise money that can finance mergers and acquisitions (M&A). The resurgent IPO market is the main reason why equities headhunters have been getting so very excited about the third quarter.
If you want a job in banking soon, you're therefore advised to keep a watchful eye on the fulsomeness of banks' 'IPO pipelines.' Barclays gave them a boost last week when it announced plans to raise £5.8bn through a fully underwritten rights issue to be launched tomorrow. Historically, September has been a great month for IPOs and with luck, this will remain the case in four weeks' time. If it doesn't, the banking jobs market could become a lot less sparkly as the grey weight of regulation takes an even firmer hold. And no one wants that.