Weak profits ‘set to hinder City hiring’

Nick Elvin

The hiring of permanent staff in the City could be affected by weak profits among some of the biggest banks, according to market analysis from recruitment consultancy Venn Group.

The warning comes at the same time as a report from KPMG which urges the five largest banking groups to work harder to become more profitable, with return on equity for shareholders still being eroded six years after the financial crisis.

Commenting on current market conditions, Robert Bowyer, director at Venn Group said: “KPMG’s report that all of the City’s big five banks achieved profits less than 8% last year – compared with an average of 11.6% in 2009 – is unwelcome news for the financial services sector.

“Banks are being held to greater account for their conduct and face increasing cost pressures under tighter regulation. This will inevitably have an impact on permanent hiring as financial institutions look at reducing headcount cost as a means of improving returns for shareholders.”

Venn Group’s analysis, Bowyer added, shows that any freeze on permanent hiring is likely to increase demand for contractors as organisations seek to plug gaps to maintain efficiency levels.

“Although there has been a dip in overall vacancy levels in recent months, this new landscape has created a spike in demand for structured finance division (SFD) specialists – particularly those with experience in EMG business management systems – who can help organisations to manage risk and return by navigating the complex legislative parameters,” he said.

“The financial services sector continues to be the biggest occupier of City office space, and although established banking groups may be tightening their belts, an increase in investment management and advisory firms is creating demand for specialists to work in these areas.”