The Help Wanted signs are hanging in Wall Street windows again.
Apparently, being a banker is back in vogue.
Despite the recent market slowdown, Wall Street’s army of recruiters has been out in full force. From February through May, New York’s financial industry added 6,800 new positions, the largest hiring increase in more than two years.
To lure new hires, the big banks are offering big bonuses and even bigger salaries. The demand for investment bankers and traders has led some firms to offer pay packages as high as $8 million, including guaranteed bonuses, paid regardless of performance by the employee or company.
According to a report released by Options Group, a New York-based executive search company, Wall Street firms are paying 30 to 40 percent more than most prospective employees were expecting. After seeing its ranks decimated during the economic downturn, Wall Street’s biggest banks have been quietly waging a bidding war to replenish their rolls of analysts, traders and even salesmen.
Normal Rhythms Are Returning
Wall Street mainstays, like Morgan Stanley, added about 400 employees to its sales and trading business over the last year. Morgan Stanley’s headcount reached a record of 62,211 in the first quarter as a result of new hires and the addition of Smith Barney workers after it bought a controlling stake in a brokerage joint venture last year.
Goldman Sachs increased its employment rolls in the quarter by 600, to 33,100, still below the peak of 37,600 in the third quarter of 2008. Bank of America and JPMorgan, which added to their headcounts in the first three months of the year, remain below their highest levels. Citigroup appears to be the sole exception. In an attempt to cut costs and rebound from its near demise, Citigroup has reduced its headcount by more than 100,000 since its peak in 2007.
It should come as no surprise that Wall Street is on a hiring binge.
No Pain to be Felt
Wall Street’s five largest firms — Bank of America Corp., JPMorgan Chase & Co., Citigroup, Goldman Sachs Group Inc. and Morgan Stanley — posted a combined net income of $16.2 billion in the first quarter. Three reported record fixed-income trading revenue. It was the highest combined profit for the banks since the second quarter of 2007.
The big banks spent millions on lobbyists to defeat key provisions of the financial reform bill that aimed at curbing their freewheeling practices. Now with the votes essentially counted and the legislative package headed towards the President’s desk, the cloud of uncertainty has been removed. With the passage of the bill, Wall Street firms know what to expect and can finally start hiring to fill their vacancies.
Most analysts believe that the financial overhaul will limit the bonus guarantees and lavish perks that once were a fixture on Wall Street. The notion is to link compensation more closely to long-term performance. But with the heated competition for qualified candidates in full swing, base salaries, as opposed to bonuses, have seen a significant upsurge.
It has been a long held precept that, as goes Wall Street, so goes the rest of the nation. Historically, trends on Wall Street are a precursor for the rest of the economy. But with the national jobless rate still hovering around 10 percent, the hiring boom on Wall Street brings little comfort to the 16 million Americans still out of work.
John Cohn is a senior partner in the Globe West Financial Group based in West Los Angeles. He may be contacted at www.globewestfinancial.com
