Mulsanne Opinion – Q3, 2014 October 2014

Mulsanne Market Overview
Our Q3 market overview shows yet again that secondary markets in banking is yet to reach a recovery, with Credit, FX and Rates all showing limited hiring over the last quarter. We have seen the primary markets also slowing, with hiring concentrated at the upper and lower corporate levels. Private Banking and Wealth Management have experienced a decline in Emerging Markets hiring, while Asset Management has seen mainly strategic senior hires in the EM regions. FinTech continues to be a key grow market with noticeable activity in the Payments sector.

We have seen a slight increase in confidence within the structured finance and securitisation businesses due to a rising demand from clients for banks to restructure debt. Banks have been looking to strengthen their teams between the Associate and VP level. However, flow credit businesses have been steady with little movement which has meant there is no demand for replacement hires. A number of clients have looked to guarantee some of their larger deals and transactions which has meant Directors and senior Directors are committed to staying in their current positions rather than explore opportunities with competitors.

Ongoing regulatory pressure within the FX market has meant trading practices are being heavily scrutinised, subsequently decreasing banks’ appetite to take risk. FX teams are being downsized and competition between banks remains limited. The continued growth of eFX trading and trading systems has led to an increased demand in more technical talent and we see this growing in the coming months.

Interest Rates:
Hiring across the whole of the rates space remains minimal. A small number of rates traders have made the move to the buy side but have not been replaced due to ongoing economising. However, profits have increased especially within inflation and gilts businesses which may mean there will be room to bring on junior talent post bonus next year. There is a lack of talent at the VP level in a number of teams. Business heads will not commit to mandates at this level but they are starting to show more interest in initial conversations.

Investment Banking:
Q3 has seen hiring in IBD retreat from the peak of activity in Q2. Partly due to the ‘summer slowdown’ but also due to poor results in the markets divisions and a conservative attitude towards growth by most banks. While coverage teams remain strained at the mid-levels (Associate & VP) there is also a growing concern about succession planning at senior Director and junior MD level. For the short term, the majority of hiring continues to be at Associate and MD level.

Private Banking & Wealth Management:
Within the Private Banking market, Eastern Europe and Russia in particular have received diminishing focus from most Private Banks, with some withdrawing entirely from related London-based operations. Cross-border and ongoing political issues continue to put pressure on Private Banks to change their focus to onshore. However, there has been continued and consistent hiring in the market across most client areas. We have seen increased Private Banking M&A deals, as well as new entrants into the UK Private Banking market.

Asset Management & Emerging Markets:
There has been a slight bias towards emerging market hiring (fixed income and equities) over Q3, which has been down to a stalled Eurozone economy over summer. There have been key strategic hires at a senior level across asset management houses in London over Q3 in developed markets, alternative investments and emerging markets. Equities have outperformed fixed income markets over the quarter and this may effect a bias for equities hiring over Q4. Several large asset managers and global banks reported good rates of growth over Q3 and this should see a slight increase in hires over Q4 as firms look to capitalise on a positive quarter and continue growth into the New Year.

Financial technology continues to grow unchecked. With Q1 projections across the globe regarding volume hiring and aggressive revenue projections it is an exciting time. Transformation talent is at a premium as is mobile and E-commerce. Payments has been a huge focus for many companies. It is a key space with great opportunity for new start up's and tech giants‎ alike. Acquisition of two large European payments companies in this area demonstrate the potential. The plans for next year are already changing with this extremely dynamic and buoyant market.