New City jobs up by 20% in a year but growth hit by return of investment bank hiring freezes
2,640 jobs were created in the City in March 2014, compared with 2,190 in March 2013, according to the recruitment company.
However, Astbury Marsden explains that the number of new jobs created in the City in March was down by 18% from the 3,220 new jobs created in February 2014.
Jonathan Nicholson, managing director at Astbury Marsden, says, “Hiring freezes at some of Europe’s largest investment banks have helped interrupt the recent recovery in the City jobs market.”
“Despite the buoyant recruitment market in fund management and brokerages the overall job figures are being dragged down by the largest investment banks that have been hit hardest by regulatory intervention and, in particular, the new capital adequacy rules.”
“It doesn’t help that the banking levy adds another £2.3billion onto the sectors costs – a tax bill they have to pay no matter how unprofitable they might be.”
The number of qualified candidates looking for new roles remains high at 8,620 in March versus 8,300 in the previous month – suggesting more employees are growing confident enough to start looking for a new job.
Astbury Marsden says that the new regulatory capital requirements continue to force a reshaping of the investment banks.
Adds Jonathan Nicholson, “The economics of everything from fixed income to commodity trading have been upended by the regulators. Now, if trading conditions become marginal then making an acceptable return on capital becomes very challenging for some banks. Fee income has also been patchy – despite the red hot IPO market.”
Whilst equity capital market fees for investment banks in Europe (created by the rush of IPOs) are at their highest level since 2007, debt capital markets are having a weaker time. Research house Dealogic estimates that fees from bond deals across Europe are down 6% over the last year to US $1.8billion.
Nicholson said, “As the economy slowly moves forward it is inevitably going to drag forward the profitability of the City and heat up the jobs market but the cyclical upturn for investment banks is going to much shallower this time around.”
“New regulations mean that a lot of that job creation is going to be outside the bulge bracket banks and in the hedge funds, trading firms and brokers. Where they can, banks will continue to send jobs off to regions with less heavy handed regulations like SE Asia."