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"None of those equities hires have been game-changers, except...."

If you work in equities and you haven't had a call from someone representing either Barclays or Credit Suisse in the past 18 months, you can forgiven for questioning whether you are generating a bad smell. Both European banks have been doing some huge hiring in 2017-2018. Both have been scouring the market for new recruits.

Barclays yesterday said it has made 49 research analyst hires since July 2017, and 70 hires to its global equities team. At the time of its investor day last week, Credit Suisse said it had hired over fifty people in equity derivatives and 10 "senior research analysts" who have "initiated research coverage on 13 sectors and 185 stocks" over an unspecified time period.

Barclays proudly reels off a list of its new additions, which date back to Rupert Jones, the former head of European equity research at Morgan Stanley whom it hired in July 2017, Stephen Dainton, the global head of equities at Credit Suisse, and - more recently - Dominic Nash and Peter Crampton, the utilities analysts it just hired from Macquarie.

Credit Suisse is less forthcoming with names, but the big additions began with Benoit Rauly and Mike Stewart from UBS in 2017, followed by a litany of new recruits such as Gary Geiler from Commerzbank in London in early 2018 and Hippo Agkpo from Bank of America in September 2018. In sign that all might not have been going to plan, Rauly left again in September 2018 and Credit Suisse promoted long serving employees Julien Bieren and Thibault Dufour to run the equity derivatives business instead. Meanwhile, Steve East, Credit Suisse's European head of equity research, quietly left the bank in August, and is understood to have been quietly replaced by Tim Ramskill, an existing MD and leisure analyst at the bank.

With each hire likely costing $250k at least in salary and bonus, Credit Suisse and Barclays have clearly spent some very big money on their equities businesses. Accounts released for Credit Suisse International show the London equities and equity derivatives business making a loss of $6m and $76m respectively in 2017. - New recruits don't come cheaply.

Both banks, however, already have something to show for all their spending. Credit Suisse said its equity derivatives revenues rose 70% year-on-year in the third quarter (even though its overall equities revenues fell by 2%) and is pinning its hopes on further big revenue increases in 2019 as its headcount investments come to fruition. Across equities as a whole Barclays has outperformed the entire market this year; its equities revenues were up 33% year-on-year in the third quarter, and the bank was ranked top overall in the Thomson Reuters European analyst awards in July.

Even so, the two banks have their naysayers. For all the new recruits, fanfare and revenue rises, three London headhunters insist that neither bank has made sufficient "transformational" hires to make a lasting difference to their equities franchises in Europe at least.

"There haven't been many game-changing hires this side of the Atlantic," says one London equity derivatives headhunter, speaking off the record. He points out that many of Credit Suisse's existing senior equity derivative professionals in London (Steven Jorgensen, David Cohen, Richard Sehayek) have only just been promoted to MD and that most hires in London report to them.

Similar aspersions are cast upon some of the new recruits at Barclays. "A lot of these guys are good, but they're not the stars," says an equity research headhunter, also speaking on condition of anonymity.  "Barclays has picked up various people who were unhappy, or were at second tier houses," he alleges.

In light of their rising revenues, both Barclays and Credit Suisse have good reason to disagree. Barclays in particular is deemed to have made some 'game changing' hires in Europe in the form of Naseer Al-Khudairi and Matt Cousens (both from Credit Suisse) and Stewart himself has clearly transformed Credit Suisse's equity derivatives business.

2018 has also brought a warning, however, of what can happen if change doesn't come quickly enough. As we were first to report last month, Berenberg announced in November that it was, "re-setting equities headcount back to the beginning of 2017." Another London equities headhunter said Berenberg was the big hirer in the first half of 2018, but has since been flinging people on the street. "These people are going into 2018 looking for jobs," he says.

Berenberg's unwanted equities professionals might want to try knocking on the door of RBC Capital Markets, which one headhunter insists has been making transformational equities hires in 2018 after recruiting Jas Sandhu, the former head of algo strats at Morgan Stanley, and Julian Livingstone-Booth, the former head of the European real estate equity research team at Goldman Sachs, both in October, plus the likes of James Bell from Bank of America Merrill Lynch in June. "RBC are the bank to watch in equities," he says. "They've quietly been doing a lot of hiring in London, particularly in research."

While equities professionals were popular in 2018, their popularity may not endure next year. "In the last quarter equity research hiring has been hit by various headwinds including MiFID II, Brexit, a lack of IPO activity," says Zaki Ahmed, a recruiter at Financial Search in London. "These headwinds will probably continue for at least the first quarter of 2019 as there is still overcapacity in equity research," he adds."- You do not need 20 analysts covering a stock."

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AUTHORSarah Butcher Global Editor

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