Britain’s bankers feel the freeze as jobs disappear
Summer has arrived in London, but the smiles are likely to remain frozen in the financial community as HSBC Holdings and Deutsche Bank join Nomura Holdings in implementing thousands of job reductions. In an atmosphere that may be the gloomiest since the financial crisis, some are jumping before they’re pushed.
“It’s one of the worst London job markets I have ever seen outside of a crisis,” says Stephane Rambosson, founder of Vici Advisory, a Londonbased executive search firm. “I think there’s a real possibility that you could see more than 5000 jobs lost by the end of the year.”
Experienced bankers have seen contractions before, but there’s a feeling that this time is different. It’s not just shaky markets, trade tensions and Brexit: automation is making some banking skills obsolete.
The scale of job losses and changes in the industry are forcing bankers to examine all manner of alternatives. One former Nomura staffer describes dejected colleagues moving into blockchain, cannabis and even agriculture.
“People are stressed out and desperately looking for new things, because they know it’s not going to be easy to find a job at another bank,” says Rambosson, a former investment banker. “We see people quitting before the cuts come and taking the view that now’s the right time to get out.”
There has been a steady drop in investment-bank employment since 2013, according to data from business intelligence organisation Coalition Development, when UK headcount in front-office roles totalled just under 17,000. By 2016, that had dropped to 15,000. By the end of last year, almost 1500 more jobs had been eliminated. That’s a faster pace than overall industry job losses. Coalition data shows a drop of 6600 front-office roles worldwide since 2013, to 51,800.
“Things will get worse,” says Amrit Shahani, research director at Coalition. “We expect a further 10 per cent reduction in investment bank headcount in the UK over the next two years, partly due to Brexit job moves.”
Figures from recruitment consultants Morgan McKinley show the scale of the slowdown in the city job market. In May, 2369 new financialservices jobs were listed, a drop of 50 per cent year over year, even as the number of job seekers held steady at just under 4000.
Brexit relocations add to the tally. Figures published by the EY consultancy this month put planned moves to other EU countries at 7000, of which almost 1000 have already happened.
For the 9000 UK staffers at Deutsche Bank, the rounds of restructuring
I think there’s a real possibility that you could see more than 5000 jobs lost by the end of the year. Stephane Rambosson, Vici Advisory.
may seem endless. Last week, people familiar with the matter said the bank was preparing to start eliminating up to half the jobs in its global equity division. Even Garth Ritchie, who runs the investment bank in London, may soon be replaced as part of a cull that could get rid of as many as 20,000 jobs around the world, the people said.
At HSBC, bonuses never soared to Deutsche Bank’s levels, but there was a sense of security at a sprawling institution where some staff worked for decades. CEO John Flint, under pressure to cut costs, is set to change that. At least 500 jobs could go within global banking and markets, people familiar with the matter said in May, and London was likely to be on the front line of the cull.
Nomura announced US$1 billion in cost cuts at its wholesale division in April. The London part of that business was designed to service hedge funds that do a lot of trading. They’re not doing much at all, given persistently low volatility, and many have shut their doors.
Ultimately, bankers face the rise of the robots. Big banks have increased their investment in IT and collectively are spending tens of billions of dollars a year to automate jobs currently done by humans.
UBS Group recently studied 49 major banks, including Barclays, Deutsche Bank and HSBC, and found that they had collective software and IT assets of US$70b in 2018, more than double their value in 2010.
“If you’re someone whose job is being automated then it’s tough — and it’s hard to know where they will go if these jobs are being automated everywhere,” says James Murray, who recruits workers for financialservices companies.
“The people who understand trading models and can work with the automation guys are very much in demand.”