European investment banks are, in theory, supposed to be making a play for a bigger share of the U.S. market. UBS says it's still hiring on Wall Street, even as it keeps things steady elsewhere, and Deutsche Bank's hiring freeze still means that it's willing to invest in a senior banker state-side.
But disappointing revenues combined have led many to hold fire on their hiring plans. And Brexit has only made things worse.
“This year we’ve been working with big European banks and we’ve had instances where they just pull out in middle of onboarding investment banking candidates because their needs change,” said Cesar DeLara, a senior consultant in the investment banking practice at Selby Jennings. “Hiring has been spotty – they’re only pulling the trigger when really needed or pertinent to a particular team."
Some European banks are still hiring in the U.S, however. Here are areas that are relative bright spots among the gloom.
“Most of the big European banks in the U.S. are on a hiring freeze,” said Brian Byck, managing director of Odyssey Search Partners, who specializes in sell-side and private-credit placements. “The only exception seems to be within M&A where experienced deal professionals with client contacts can still find a new home.”
Predictably, following on from the trend over the past year, technology and healthcare are particularly active.
“Many European banks do see a need for investment bankers in technology and healthcare – there’s quite a bit going on in the diagnostic sub-sector in particular,” DeLara said.
Legal, compliance and tech
When it comes to the Dodd-Frank Act and Comprehensive Capital Analysis and Review (CCAR), U.S. banks have it reasonably nailed down, but many European banks not so much. Deutsche Bank and Santander recently failed the Federal Reserve’s CCAR stress test.
“Between legal, tech and compliance, all of these expenses are huge, accounting for hundreds of billions of dollars that these banks are paying,” said Nick Careless, managing director, Americas, at Twenty Recruitment Group. The compliance burden is continuing to eat up banks' hiring budge, he says.
The hires that have been coming through the recruitment pipeline have been primarily jobs related to intermediate holding company (IHC) regulations, Pre-Provision Net Revenue (PPNR) modeling or CCAR, Careless said.
Other areas where European banks have looked to add headcount this year include technology, business analysis, project management, change management, risk management, compliance and model validation.
“How the banks stress-test themselves for regulatory compliance is a hot area – there’s not a lot of people with PPNR modeling experience, so some firms are being more open-minded about hiring candidates provided they have the core skills to wrap their heads around it,” he said. “Most have a huge firm-wide focus on these regulatory change initiatives.”
In particular, Deutsche Bank and Santander have responded to the Fed identifying issues in their respective stress tests by going on a hiring spree to bolster their internal capital planning, controls, infrastructure and stress-testing.
Many European banks with a U.S. presence are moving their support operations to places such as Tennessee, Utah, Texas and Florida, said Eric Goldstein, global financial services leader of Korn Ferry Futurestep. For example, during the past couple years UBS has been moving its U.S. Business Solutions Center operations to Nashville from Weehawken, New Jersey.
Audit is also key area where a lot of European banks are under the microscope, with plenty of attention from U.S. regulators.
“On the audit side of things, the Fed has identified a number of areas of weakness at some of these firms,” Careless said. “There is continued scrutiny from the Fed around the auditing systems in these firms, which have quite a lot of work to do there.
“It’s not among the sexiest areas to work in, but it’s definitely a good time to be an auditor – it’s a hot area,” he said. “Banks have an insatiable appetite to hire good audit folks.”
While banks still like to hire auditors from the Big Four, candidates don’t have to be from one of those firms to land a plum banking gig. More banks are willing to hire candidates from top-10 national firms and in some cases even top-50 regional firms.
"Audit, risk and compliance jobs are likely to remain the most resilient area of hiring regardless of negative market conditions or developments," Goldstein said. "Client-facing hiring, including wealth and investment management, has been soft for the first half of the year, and we expect it to continue to tick down as employers’ efforts seem to focused on retaining top performers. Investment banking has been among the most negatively impacted areas of hiring.
"Although there has been some relaxation of capital requirements in Europe in order to stimulate lending, the regulatory and control environment remains strict given the recent memory of the 2008 financial crisis," he said. "Here in the U.S., regional and community banks, as well as credit unions, have been more active on the hiring front in various areas."
Sales and trading
Societe Generale, Crédit Agricole and even ING are looking to ramp up their hiring in equity and fixed income sales and trading, as they use other banks’ cost-cutting as an opportunity to dedicate more capital to their U.S. businesses as Brexit gets sorted out.
“They see Brexit as an opportunity to scoop up talent from British, Swiss and German banks,” said Jeff Koehler, FICC and equity sales consultant at Selby Jennings. “Those candidates, for the first time in their careers, are open to moving to a smaller to mid-sized shop where the role and culture is different, and maybe move up a notch in salary."
FX and rates
UBS and HSBC have both made senior hires to their European rates desks in recent weeks, and there is some hope that European banks will look to hire in those areas in the U.S. as well.
“I think there’s a good chance that European banks will pump more resources into the U.S. in areas with upside such as FX and rates,” Koehler said. “Both of those have been very quiet over past year, but now with the pound decreasing to its lowest point in years and a surge in volatility, there’s an opportunity for banks to become more active in those spaces.”
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