Mulsanne Opinion – Q2, 2014 July 2014

Mulsanne Market Overview

Our Q2 market overview, highlights a dichotomy in hiring across our sector coverage. Hiring in the Credit, FX and Interest Rate space has been limited, whereas the Investment Banking, Private Banking, Asset Management and Technology markets have seen continued growth. This divergence is largely driven by increased regulation in the markets business, coupled with lower volumes across fixed income. Volatility in the Emerging Markets political arena has left hiring concentrated in risk and related functions, though in these particular spaces we are still seeing a large volume of hires.

Hiring on the flow side of the business has remained tepid. Regulatory costs along with reduced volumes mean profitability remains low. In turn this leaves most flow businesses well-staffed with little appetite to grow; even replacement hires have been reduced through a lack of budget. There has been growth in the structured finance space, with hiring across ABS, securitisation and real estate remaining strong.

Little change in the FX market during Q2 with most banks bedding in new structures following regulatory action in that space. Few banks are looking to upscale; most are instead filtering through staff from the more junior levels. Emerging markets FX has been more volatile and there remains demand for good talent in this space. Although, current geopolitical tensions mean Russian banks in particular, which were expanding internationally, have scaled back in some instances.

Interest Rates:
We have seen extremely limited hiring across the rates space, both in flow and structured products. Banks continue to scale back these operations. As such, hiring managers have been reluctant to add to existing headcount levels. With few banks bidding for talent in the market, there has also been a lack of replacement-driven hires. As yet there are few indicators of increased activity in this space.

Investment Banking:
Following the bonus round in Q1, attrition levels were relatively low in comparison to recent years, with few lateral moves taking place. Where there were departures, they have necessitated replacement hires. Equally, we have seen a need to add additional resources to these teams. Q2 has continued to see strong hiring at MD level, as well as at Associate and VP level where banks are looking to add up-and-coming talent to their ranks ahead of the competition.

Private Banking & Wealth Management:
Q2 has seen a pronounced pickup in activity, in terms of people moves and acquisitions of smaller boutiques by larger entities. On the other end of the scale, a Tier 1 house has dominated the news in the sector with the amount of staff turnover that they have endured. Albeit, a large proportion of those leavers have been part of a deliberate downsizing. Hiring in general continues, especially within the same three key areas as in Q1: UK Domestic, UK Res Non Dom and the Ultra High Net Worth / Family Office space.

Asset Management:
The market continues to be steady in Asset Management, with growth in Alternatives and continual upgrading of talent both in terms of Sales and Senior Investment Roles to ensure a competitive edge. There has been a plethora of acquisitions taking place such as Legg Mason purchasing Martin Currie.

Emerging Markets:
Given current market conditions and sanctions that have been applied to the Russian market, government banks which have also been affected continue to hire in sectors such as finance, risk and credit analysis. Private Banks continue to hire – both in the front and the back office. Across the rest of CEEMEA there has been some turn-over in flow spaces and continued growth on structured products. To date the latter has been biased towards sales and structuring. As with the Russian market, we continue to see demand within finance and risk.

In Q2 there has been growth again with three key areas noted within the Financial Technology space: Mobile Payments globally, operational roles in Risk and Compliance in North America and Europe, and in Sales and Presales teams across North and South America. Many of the banks in the Americas are expanding and the knock on effect is driving growth in the technology companies. South America has seen expansion with many of the technology businesses growing their regional offices in locations such as Mexico, Ecuador, Brazil and Costa Rica. The Mobile Payments sector carries on unabated in the larger organisations. Equally, many smaller, innovative companies are hiring; especially where they have received second stage funding where strong investment in senior talent is a given.