December 6, 2023

Investment Banking

Let Your Investment Banking Do The Walking

The banks hiring into the downturn

It’s a tough old year to be an investment banker, but you wouldn’t necessarily know it from the banking job market. 

Just ask Deutsche Bank and Barclays. The two banks reported their third quarter revenues today and they were not pretty. At Deutsche, ECM and DCM revenues shriveled to almost nothing in Q3, while M&A revenues were down 23%. Overall advisory revenues at DB fell 83% as a result. At Barclays, M&A advisory, ECM and DCM revenues were down 41%, 77% and 36% respectively. 

You might think this would discourage hiring, and indeed Deutsche Bank has been clearing out a few investment bankers, mostly at the junior end. However, DB has also been recruiting.  In 2022, it’s added 22 managing directors or directors in origination and advisory globally. Today’s investor call referenced these “strategic” hires. In the past quarter, front office headcount across Deutsche’s investment bank rose by 164 people. 

Barclays has been hiring too. Two weeks ago, it added Sean Burke as co-head of financial institutions group (FIG) banking in North America. Four months ago, it added Arif Vohra from Bank of America to run FIG in Europe. In September, it hired Daniel Hanna as Global Head of Sustainable Finance for the corporate and investment bank, among others. 

Other banks are recruiting as well. Evercore had a pretty miserable third quarter, and yet its headcount rose by 25 people and it’s lined up a new senior managing director who’s joining in the coming months. CEO John Weiberg said today that this is a “good time to be investing.” PJT Partners disclosed yesterday that it increased headcount by 73 people or 8% in the third quarter. PJT CEO Paul Taubman said hiring had slowed but only by “a smidge.” In this environment, it’s all about hiring at “the most senior level,” he added, observing that senior bankers are more willing to move because the “friction cost” of swapping jobs is less. 

In this way, banks reporting this week echo Bank of America, Citi and JPMorgan, which said last week that they too are committed to keeping on hiring. By comparison, Goldman Sachs, BlackRock and UBS have indicated that hiring is being pared-back to critical recruits. 

Why add heads when revenues have halved? One reason is clearly that the right senior bankers can bring in new business. Another is that next year might be better. Speaking during today’s investor call, Deutsche Bank CEO Christian Sewing said several times that DB’s origination and advisory (O&A) business is likely to have a better 2023. Nonetheless, Deutsche is all about “variablizing” its costs these days and if expected revenues don’t happen or fall off a cliff, Sewing was also very clear that bonuses, hiring and growth plans will all be cut to the bone.

Photo by Sam Wermut on Unsplash

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