If you’ve been paying close attention, you may have noticed something curious about the type of recruiting that has taken place in investment banking over the past year. After years of downsizing and removing expensive revenue generators, banks have added them again. At the same time, recruitments for support functions have been sharply reduced.
This is a reality summarized by Deutsche Bank, which usefully distributes the number of employees working in the front office compared to the middle and back offices of its investment bank. As Deutsche rebuilt its revenue generation potential, its front office workforce increased 4% in the first nine months of 2021 compared to 2020; DB’s back and middle office staff fell by 8% over the same period.
EFinancialCareers own data reflects the trend. As the graph below shows, the sectors where hiring was cut this year are all in the back and middle office. The sectors where hiring has clearly prospered are all in the lead.
Surprisingly, perhaps, generic trade jobs are the most on the rise in all product categories. There’s probably some overlap here with the increase in jobs in hedge funds, forex, and stocks, and it’s safe to assume that many of these jobs are in e-commerce rather than high-intensity commerce. of contact. Multi-strategy hedge funds hired on the basis of an exceptional 2020, and stock trading was a strong point in 2021 (notwithstanding Archegos related losses in prime broking). BofA and Goldman both cited the strength of their FX trading business when they released their third quarter results.
The least surprising figure in the graph below is the 54% growth in investment banking and M&A jobs posted on eFinancialCareers over the past 12 months. As deals and IPOs exploded, banks collapsed to add execution power at the bottom and initiators at the top. – Speaking in October, Citi CEO Jane Fraser said the bank hired 200 senior bankers in “high growth” areas such as tech, healthcare, fintech and financial sponsors in 2021 Credit Suisse’s new investment banking director, Christian Meissner, said the bank hired 1,200 people across all divisions, including 45 traders in key markets.
As jobs are added again in the front office, costs are tightly controlled in the middle and back. Our numbers show that hires have fallen the most in operations, risk, and compliance this year – all areas where banks are trying to automate as much as possible. Surprisingly, perhaps, tech hires have declined as well – but banks are also struggling to keep tech spending under control.
For all the hires, the workforce has not increased significantly. Data from banking information provider Coalition Greenwich indicates that the total global workforce in the fixed income and equity markets is roughly stable this year compared to last year, while the bank’s workforce investment is up just over 1.5%. Anecdotally, people are leaving certain positions as quickly as the banks can hire them. – Analyst and partner positions in major investment banks are an example.
Photo by Matheus Frade on Unsplash