New banking job in 2024? Hope that someone else leaves
If you couldn't find a new banking job in 2023, then good luck finding a new banking job in 2024. For all the hope that this year would improve the fortunes of financial services jobseekers, and by extension financial services recruiters, 2024 is not starting on a high note.
"No one can get hiring sign-off, everyone is asking for more cuts and there's not a lot of hiring going on," says one London capital markets headhunter, speaking off the record. "It's going to be tepid this year," says the head of one international search firm, surveying the landscape ahead.
The fundamental problem is one of revenues, costs and returns. As Rupak Ghose pointed out in the International Financing Review last week, the return on equity at US banks' investment banking and markets divisions have fallen dramatically from the highs of 2021. At the likes of Morgan Stanley and Citi, division-specific RoE is now well below 10%. At Goldman Sachs, costs climbed to 75% of revenues last year when one-off items are included (or 65% when they're not). The firm is targeting 60%.
The upshot is that, unless revenues rebound fast, banks have more costs to cut. Bank of America's cuts this week are testimony to this. Citi's 15,000 cuts (excluding business exits), highlight the structural issues.
Among some headhunters, the fear is that 2024 could be even quieter than 2023, when the collapse of Credit Suisse and hiring at Jefferies, Deutsche Bank and Santander helped keep things afloat. "It's all about cost management. There's very little underlying demand and people are trying to run with what they've got," says this London headhunter.
This doesn't mean there will be no hiring at all. As Bank of America CEO Brian Moynihan observed last week, in a usual year, 12% of people leave BofA of their own accords. Last year, that was down to 6%, but with a population of 213,000 people that still implies nearly 13,000 jobs to fill. And even though BofA was trying not to fill jobs externally last year, Moynihan said 15,000 people were hired.
Most of 2024's banking jobs are therefore likely to be the result of someone moving on. Of the 10 headhunters we spoke to for this article, most said replacement hiring is still the name of the game. But replacement hiring depends upon people leaving and this depends, in part, upon how disgruntled people are with their current jobs. That disgruntlement will be fuelled by the current bonus round, which is not the best, but better options may not be on offer elsewhere. "People are unhappy with bonuses, but they are also grown up and can see the macroeconomic backdrop and appreciate that the cuts are understandable," said one headhunter.
Things may change. If rates fall, if geopolitical tensions subside, if private equity funds decide to spend some money, deals will return and banks' profit margins will rise. But as Moynihan pointed out last week, there's not much clarity. Some headhunters are hopeful for the second half of the year. "Last year, the standard hiring cycle was broken," says one. "There was still a lot of hiring happening way past July." The wish is that this, at least, will be repeated in 2024.
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