After letting thousands of employees go over the last couple of years, banks in the U.S. are starting to hire again, although at a slow and generally cautious rate.
The vast majority of the hiring has been on the investment banking side, as the stock market has surged and credit spreads started to narrow even more.
While hiring caution still remains, it has loosened up from earlier in the year when hard scrutiny was on the industry from the taxpayer bailouts and regulatory pressures kept hiring down. Some at that time even doubted whether investment banking would even survive. But the last two profitable quarters for some of the larger U.S. banks has got things rolling again, and hiring to target the investment banking sector is increasing.
That’s in contrast to not too long ago when banks had to unwind assets they wished they could have kept in order to raise much needed cash.
Profits have come in on the investment side as consumer services continue to generate losses in the industry.
The larger financial institutions in the U.S. are now hiring, but they are also behind the curve because of their acceptance of taxpayer funds from the Troubled Asset Relief Program. Banks that were smaller and didn’t use any taxpayer funds had no restrictions in connection to compensation, so were able to attract some major talent during that time. There were also no compensation restrictions on foreign banks, who also nabbed some good people during the chaotic period.
Another field of hiring in the banking industry is in reference to senior managers who have significant experience. Banks want to shore up and strengthen these areas, and so are focusing there as well.
One interesting side to the hiring is most of the new hires are from banks that survived the crisis, which makes sense when you think of it. They want people that handled and navigated their banks through the crisis, not those that weren’t able to. In other words, they’re not re-hiring workers they let go.
Some assert from this renewed hiring that banks are beginning to feel that the financial markets are rebounding, but I think that’s far too optimistic at this time.
Rather they see growth and profits coming from the investment side of the business, and need to get good people in those positions to take advantage of it. That doesn’t mean a rebound necessarily, but a temporary situation that needs to be targeted.
But I also think they’re positioning themselves from the future, and securing good people before the elite get taken by their smaller competitors.
This isn’t a huge wave of hiring, rather it’s very targeted and specific. And whether this is a fool’s market or not, some of the investment banking side of the banking business needed to be shored up again, and why not do it when profits are coming in, rather than when new pressures emerge from hiring and bonuses offered when profits are down?
