People’s banks will hire in 2023. And who they won’t hire | Techy Kings

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Beware: 2022 is not the year to be a mediocre performer with a big salary at a big bank. As banks survey the damage done to revenues, the zeitgeist is to weed out the underperformers. And when hiring takes place next year, it will most likely focus on one thing: improvement.

“2023 will be compute neutral,” predicts the head of a front-office focused international search firm, based in New York City. “It’s not about growth, but recruitment and increased replacement.”

Naturally, there are exceptions. As JPMorgan banking analysts pointed out in a September note, it will be a bold bank that cuts technology investments in 2023; even with the decline in fintech valuations, fintech firms will likely continue to breathe downward. Similarly, the regulator is squeezing the bank (Citi) when it comes to control. This may be why, speaking at a recent US roundtable, recruiters are bullish on some technology and data jobs (machine learning and AI, UI and UX) and on some compliance and control jobs (AML and financial crime). But in the front office, hiring is a different story.

“There hasn’t been a widespread hiring freeze, but it’s tepid,” the head of the search firm said. “Everyone is focused on protecting the bonus pool.” Another US search consultant, which focuses on equity recruitment globally, said the ax has fallen on hiring for 2022: “No one is starting something new now and anyone already in the process is unlikely to close at this stage of the year. Manager line was told that if they want to hire in 2023, they have to get rid of someone to cover them.”

A recent report from US banking analyst Deutsche Bank on the outlook for front-office earnings shed light on the lack of enthusiasm: fixed income salespeople and traders had a good second half of the year; they look like the only ones.

Deutsche Bank forecast for Q3 earnings

As revenues are squeezed, costs are rising. At the organizational level, JPMorgan analysts point out that some banks are much more exposed to staff costs than others: at UBS and Standard Chartered, for example, people account for 73% and 74% of costs respectively in 2021; at BNP Paribas and HSBC only 59% and 58% respectively. However, it would be a brave bank that embarks on an integrated headcount expansion in a time of rising wages and falling revenues.

In this environment, the expectation is that 2023 will be about looking around and determining who can do the same job as current employees, better or less. Movement will still happen. Credit Suisse’s restructuring is expected to result in reductions in its sales and trading staff, some of which will attract rival interest, and may affect existing staff (Mizuho is began the expansion of its residential securitization business in America, perhaps with the aim of luring CS refugees). Bonuses at the top US houses are expected to be substantial lower, and may encourage some beneficiaries to try their hand at banks that will choose them over existing employees. But mostly, the move will not be about growth in the number of net workers. They will replace whoever is weak in 2022.

None of this has prevented new investment banking hires, especially in the hot areas of healthcare, technology and ESG. It also does not assume that banks do not need traders to replace ongoing outflows to multi-strategy hedge funds. In all markets, employee diversity will remain a focus. But no one wants to hire a middle-of-the-road employee from 2022. Unfortunately, this year’s evaluation is more important than ever.

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