How Brexit destroyed a revival in London bank hiring, in charts
Believe it not, 2016 didn't begin too badly for London's banking jobs market. It wasn't exactly a standout start to the year, nor was it an unmitigated disaster. London finance jobs advertised on eFinancialCareers increased by 2% between January and June 2016 compared to the same period one year earlier.
Then came the European referendum and the impending 'Brexit'. Since, London finance hiring has plummeted in key sectors compared to the same period last year. It's also fallen across the board: in July and August 2016 there were 10% fewer London finance jobs advertised on this site than in July and August 2015.
We're not the only ones detailing the impact of the referendum on London banking jobs. Recruitment firm Morgan Mckinley thinks the drop-off has been even more significant: it suggests that new London job vacancies fell 24% in July and August this year compared to last.
Front office finance hiring has suffered the most
If all London finance jobs have suffered since the referendum, it's in the revenue-generating front office that the Brexit-effect has been most in evidence. Before the referendum, front office job vacancies were showing healthy year-on-year growth in most key sectors of the London market. Since the referendum, that is no longer so.
IBD is a case in point. In the first half of 2016, the number of jobs classified as 'M&A and investment banking' advertised on eFinancialCareers rose by a healthy 28% year-on-year. Since the referendum (in July and August), they've fallen by 9% year-on-year.
Of course, this might have something to do with the revenue environment. Some banks didn't have a great second quarter in M&A (at Deutsche Bank revenues were down 49%). Across the board, however, things weren't too bad: Credit Suisse achieved a mere 3% drop and US banks actually increased their M&A revenues year-on-year in Q2. Even so, it might be possible to dismiss the M&A jobs decline as revenue rather than Brexit related - were a similar pattern not repeated across the board...
Operations job vacancies have fallen since Brexit too
Similar forces seem to have been at work in the London banking operations jobs market. Before the Brexit vote, it was growing. Since, it's been in decline.
Again, there are broader forces than Brexit at work. As we noted last week, UBS has begun shunting back office (and middle office) jobs out of London and into Poland, where salaries happen to be substantially lower. Nonetheless, it's curious that the climate should change to coincide with the referendum result.
The middle office jobs rush is over
While London technology jobs were growing prior to the Brexit vote, our stats suggest that trend has gone into distinct reversal since. In risk and compliance, job vacancies were already down this year compared to 2015, but the decline has become more pronounced since. Again, this might also have something to do with banks like UBS, Credit Suisse and Deutsche shunting jobs to Warsaw and Dublin.
The buy-side is still sort of OK though
While job vacancies across London finance firms fell year-on-year in July and August, the same cannot be said of the buy-side. Buy-side jobs look healthier than the rest after the Brexit-vote, albeit less healthy than before.
Private equity jobs were up 8% year-on-year in July and August, for example, which wasn't bad except that they increased by 19% in the first half. Hedge fund jobs were flat year-on-year post the referendum, which was a shame after they rose by 26% in the first half.
Ironically, in light of the concerns about UK real estate funds after the Brexit vote, the big growth area in London looks like real estate. Here, jobs have grown by a steady 17% to 18% throughout the year, Brexit or not.