European Banks are Poaching American Talent with 30% Pay Hikes

Even though Brexit has been blighting the recruitment industry in the UK, the story has been considerably different across the Channel, and now the latest stats are showing that the EU’s investment banks are back to hiring, raising their game against their American counterparts.

According to recruiters, big banks including Barclays and Deutsche Bank are looking to reaffirm their positions by poaching top talent from their rivals across the Atlantic. And they’ve got one big pull.

In the States many traders or sales staff haven’t seen a raise in years. Wall Street traders lost leverage post-financial crisis, which saw global markets in Europe and Asia recede, losing potential bidders for their services. This has lead to smaller pay packets from even some of the largest banks including JPMorgan Chase & Co.. During this turbulent time, traders and sales staff found themselves on shaky grounds and so willingly took pay cuts in exchange for greater job security.

However, whilst the Americans have been playing a conservative game of growth, the European institutions have been selling stock and businesses in order to raise capital. And with the funds now available to them, they’re going on the offensive. Both the CEO of Deutsche Bank and a spokesperson for Credit Suisse Group AG have been quoted as saying that they’re done shrinking, and are looking to return to “controlled growth” in “high return areas”.

In many cases this means that the European banks can offer American talent as much as a 30% higher pay packets and more robust bonus schemes.

Jason Kennedy, CEO of Kennedy Group in London, which hires for banks and hedge funds said, “The Europeans have realized that while they’ve been cutting costs and being a bit frugal in their behavior, they’ve been losing business to the U.S. banks and now they’re playing catch-up.”

And it looks like they’re going to be playing catchup in a pretty aggressive manor.

The Competition

It’s the time of year where banks are setting their year-end bonus pools, and so the competition for top talent will be likely putting more pressure on banks as they step to the board. Starting in January, Goldman Sachs, JPMorgan and Morgan Stanley set aside $22.3 billion dollars in the first 9 months of this year for this exact purpose. This is 3% more than in the same period in 2016 – perhaps in anticipation of increased European competition.

Looking at Barclays as an example, we can see just how audacious the competition is. In 2015 the firm hired JPMorgan veteran Jes Staley as their CEO. Upon joining the bank he immediately stopped hiring and then cut 1000’s of jobs over the next few months. Since restarting their hiring campaigns, Barclays have now also poached the head of equities trading from JPMorgan, former Goldman Sachs partner Guy Saidenberg, and former Bank of America executive Fillipo Zorzoli.

Deutsche Bank have also hired a handful of top level credit traders and salespeople in the last 12 months, pulling talent from Goldman Sachs and Morgan Stanley.

Despite fierce hiring from Europe, US investment banks are still not to be turned. Having remained fairly passive so far – not increasing pay packets, not increasing recruitment drives – they are seemingly waiting to see how things go down, more content on weathering the storm. A bold move, but will it play off? Well, that remains to be seen.

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