After a terrible 2020, finance recruiters are optimistic for 2021
It takes a certain type of person to work in finance recruitment. You need to be thick-skinned to deal with what can be irrationally demanding clients ('Where is the diversity short list for the niche trading job?'). You need the flexibility to talk to front office bankers and traders at all hours of the day. And you need optimism. Banking is a cyclical industry, and this cyclicity is amplified when it comes to hiring.
Accordingly, after a stormy 2020 for finance recruiters, there is growing sunniness with respect to the year to come. Not that anyone will put their name to it, however.
"The hiring market is picking up," declares one fixed income headhunter who works on both sides of the Atlantic. "Banks are realizing they're going to have to live with this and that they can't be like a deer in the headlights forever. We've gone from being really quiet to be really busy as clients look at their gaps."
It helps, of course, that banks' 2020 revenues have been 'immense.' UBS excepted, European banks have yet to report for the third quarter, but most U.S. banks have had standout years across fixed income trading, equities trading, equity capital markets and debt capital markets. Only M&A has struggled, and even here pipelines are reportedly strong and a recovery on the cards. JPMorgan CFO Jennifer Piepszak said activity 'surged' in Q3 as announced volumes returned to pre-COVID levels. "Companies began to shift their focus from day-to-day operations to more strategic and opportunistic thinking," Piepszak explained.
For most banking recruiters, a return to actually recruiting can't come soon enough. 2019 was a bad year for recruitment at major banks in the U.S., but 2020 has been far, far worse.
There are already tentative signs of an uptick. In America, banking recruitment reached its nadir in the second quarter of 2020, when the first wave of the virus struck. Although the pandemic continues unabated, hiring at major banks in the U.S. has recovered slightly since. Data from Burning Glass indicates that newly released jobs rose 57% between Q2 and Q3 2020.
The optimistic take on this year's slump, then, is that next year's recovery will be all the more powerful. Long term hiring patterns suggest that 2019 and 2020 were always going to be down-years in the banking hiring cycle. A resurgence is therefore overdue.
Whether the resurgence is forthcoming will soon become clear: banks are currently setting next year's headcount targets. One optimistic Wall Street headhunter says headcounts are being approved and that he "definitely" sees an uptick on the horizon.
Others remain circumspect. "There's pent-up demand, and the sell-side has started to have conversations around talent acquisition, but if COVID doesn't improve it will be hard for them to hire en masse," says the head of one international recruitment firm.
Clearing out underperformers would help fan the hiring flames. Although there's been some of this, most banks have been loathe to aggressively. "They're holding back because of the optics," says the recruitment firm head. "Cuts are happening, but far too timidly so far."
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