December 6, 2023

Investment Banking

Let Your Investment Banking Do The Walking

What we learned about banking jobs in 2022

2022 has come and gone (mostly), but the scars will last for some while yet. But as ever where there are downturns, there are lessons to be learnt from the future.

What are those lessons? Well, there are three.

A fall in revenue doesn’t spell immediate death for jobs

2022 might have been a difficult year to be a banker, but it was nowhere near as difficult a year as being a bank. Revenues fell by over 50% in investment banking businesses, with DCM and (especially) ECM driving the falls.

In spite of this, and even though ECM teams experienced revenue reductions of more than 80%, jobs have been relatively safe – so far. 

Most banks are just trying to weather the storm. Bank of America, for instance, has decided to simply let the high attrition of investment banking jobs have an impact via a hiring freeze until headcount is passively lowered.

This is quite a good strategy – given that around 8% of front office staff leave organically yearly, BofA can achieve an adjustment on a par with Goldman Sachs’ proposed cuts. 

Even the huge cuts by Credit Suisse, where around 18% of its workforce being shown the door by the end of 2025, are probably “only” around two years’ worth of attrition for the Swiss bank.

Shiny new technology can be deceptive

Tech cuts ran a lot deeper than banking, with Twitter (50%) and Meta (13%) some of the worst hit – but Amazon (10,000), Cisco (4,000), and HP (5,000) also shed people.

A lot of tech’s recent hires has been people who were in finance – or would otherwise had been in finance – in spite of some warnings against moves into tech.

Play with fire, get burned – and a lot of bankers who dreamed of the gold rush in Silicon Valley will lick their wounds and head back home.

The prodigal son returns, supposedly.

Memories of past talent shortages die hard

Even if banks have too many junior bankers for the current amount of deals being executed, they can remember the recent past. In late 2020 and early 2021, analysts and associates were very difficult to find.

One young VP (then associate) who’d been looking for a job as the talent shortage kicked-in told us: “The recruiters who’d refused to talk started calling me up. From being ignored, I was suddenly feted. Technical questions were dropped from interviews and candidates like me who had previous experience were waived through.”

After struggling to hire people, there are signs that banks are loath to let them go again.

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