The following perspective on 2016 investment research recruiting is from Oliver Rolfe, who heads Spartan Partnership, a London-based executive search firm specializing in equities recruiting.
It started so brightly, with positivity and optimism, only to end in a murky darkness with little idea which way to turn. Good bye to 2016!
We have been Brexited, we have been Euro-zoned and we have all been Trumped. However, with every situation creates opportunity and this is what we are focusing on moving in to 2017.
Looking back at 2016, few were predicting Trump’s election victory or Britain’s voting to exit Europe. However, neither of these have happened yet, so in 2017 we will have a clearer picture of where we are going next.
That said, in 2016 we have seen huge changes in the thoughts and focuses of many banks. Although in Europe this is largely pinned to the Brexit, the real culprit is MiFID II. In 2016 you have seen banks focus their research efforts even more than ever before, with those who are unable to compete on a wider scale focusing on their preferred sectors.
Whilst the Tier 1 banks have kept their wider focus of the market, many have redistributed their costs and have utilised far more juniors and VPs than ever before. On the face of it, you can say that the level of service provided to the buy-side will decrease, but at the same time the industry has removed many seniors with memories of what used to be, rather than what is. What the banking world has created is The New. This is the new reality. This is the new industry.
In 2017 we are taking another step toward tightening the belts in the financial world. With MiFID II and Brexit, Europe has very little to be buoyant about in the coming years, but you can achieve a good job with a good total compensation, it just will not be like the good old days. For many, it will be for the Millennials to sort out.
Throughout 2016 we heard of banks cutting staff and replacing with junior employees, moving offices and relocating to lower fixed cost locations. Mirabaud stopped their expansion of Pan-European Equities and have gone back to focusing on Switzerland & Spain. Baaderbank made sector cuts, including Automotive, Biotech & Pharmaceuticals. Commerzbank are to cut a total of 9,600 jobs in the coming year, whilst Credit Suisse is looking to cut a further 1,200 (6,000 in total).
ING are following suit and cutting 5,800 jobs across the bank, in what is being called Digital Transformation. Deutsche Bank is reportedly looking to cut up to 10,000 additional positions across the bank, with 1,000 coming out of Germany. This number has not been confirmed but it seems that Deutsche needs to take action and reduce their 100k+ workforce despite significant cuts in 2016.
Whilst the banking world is obviously in a state of change and flux, we have also seen a number of senior — and positive — hires being made by the banks. On one plus point, growth-oriented Bryan Garnier hired ex-Head of European Sales for Nomura in New York – Gary Lilley. Jefferies hired Ed Keen (Head of Equities) & Martin Coughlan (Head of Trading) from UBS. Credit Suisse has hired Mike Stewart as Head of Equities, based in New York, also from UBS. On a side note, Deutsche Bank promoted Ashley Wilson who is Co-Head of Global Prime Finance, to a new role overseeing stock trading for EMEA.
Citigroup is now without Derek Bandeen and will need to rely on those they had put in place previously, namely Murray Roos from Deutsche Bank. Citigroup have also moved their European Head of Research, Terence Sinclair, in to a Global Franchise Director for Research, with a view to focus on MiFID II.
For 2017, it seems as if the Tier 2 & 3 banks are hiring the best quality across research, sales and sales-trading from those that fall from the Tier 1 banks’ branches. Meanwhile the Tier 1’s are only making senior strategic hires to either boost the banks’ focus or to strengthen in areas that have been weak over the previous 12 months. All in all, it makes for an extremely interesting and a somewhat unnerving 12 months ahead.