Trouble seeing something? view it online
 
Issue #12 02/2017
Placed!
latest news in the world of executive search from InterExec
 
 
Welcome to Placed!

The latest issue of our newsletter which this month takes a special look at the news, issues and trends affecting recruitment in the finance sector at senior level. We would welcome your feedback – please send any comments to jane@emggb.com
Circulation 14,192
//
 

What of the Future?

 

Sian Rees, Director of Financial Services at InterExec considers the coming weeks to be significant for both employers and senior executives in the finance industry, as they think about the future.

She says: “With reviews of the past year, budgets and structures to formalise for 2017 and beyond as well as performance and bonus payments to be considered, this is traditionally the time for a real assessment of forward planning for both companies and individuals.

“But at the start of 2017 that process maybe even more pivotal. Looking globally at the political and economic situations in the US, Western and Southern Europe, China and even Australasia as well of course as the unclear long term effect of Brexit in the UK, the global financial recruitment market has rarely had so many “ifs and buts” to consider.

“For the senior executive especially in the world of financial services it may clearly be the time and year to take stock and consider the options and potentially exciting opportunities emerging in the market. Especially for overseas candidates, paid in say US$, the value of the pound and the essential attraction of London are likely to be critical factors in continuing to make the UK an exceptional place to be.”

 
//
 

Slim Pickings for Bankers This Year?

Writing in the UK edition of Business Insider recently, Finance Writer Oscar Williams-Grut reports that bankers’ bonuses could be up to 10% lower this year as a result of fears about Brexit, President Trump, and the Eurozone.

He quotes Jon Terry, who leads PwC’s global Financial Services HR Consulting practice, who told The Times that bonuses could be down “possibly by 10% in aggregate” and some lower performing bankers could even see bonuses down by 25% if their performance has been average.

The Business Insider article says that Terry blames management anxiety about Brexit, Trump’s trade policy and the state of the Eurozone.

It goes on to report that average bonuses in M&A departments across the City of London fell by 20% in 2016, according to salary benchmarking website Emolument. Only sales and research staff saw an increase, while bankers in origination departments took a 30% cut to their bonuses on average. As a result, just 17% of bankers surveyed by Emolument said they were happy with their bonus.

www.businessinsider.co.id
//
 

London Banks Gear Up Post-Brexit Plans to Move Abroad

 

Journalist David Sapsted writing in Relocate Magazine reports that leading banks are consolidating plans to relocate thousands of staff from London in the wake of Prime Minister Theresa May’s confirmation that the UK will pull out of the Single Market when it leaves the European Union.

HSBC was the first major bank to detail plans to move, saying it would go ahead with a plan to relocate about 1,000 staff from London to Paris. Swiss bank UBS also said it would relocate up to 1,000 London jobs to Germany or possibly Spain, because of the likelihood that post-Brexit, the UK would lose the passporting rights that enabled banks in Britain to trade freely throughout Europe.

And, the article goes on, Goldman Sachs is considering moving up to 1,000 staff to Frankfurt and about 500 to New York – halving its total UK workforce – according to a report in Germany’s Handelsblatt newspaper.

Meanwhile, Theresa May has pledged to make a priority of continued access to Europe for financial services in the UK and Sapsted reports that Chancellor of the Exchequer Philip Hammond, told Bloomberg TV that: “Financial services is the UK’s single largest sector in terms of GVA and we have to ensure that that’s protected in the deal that we do.”

www.relocatemagazine.com
//
 

Key Banking and Securities Trends for 2017

Deloitte says initial market reactions to the new presidency have indicated improved prospects for US banks and capital markets firms in 2017. However, as the industry matures on many fronts, uncertainty about policy shifts could weigh heavily.

Key trends outlined by Deloitte include:

Consumer Banking

  • Interest rate increases will spur modest margin expansion
  • Culture, conduct risk and sales practices are likely to be headline issues
  • Operationally, balancing cost management programmes with investments for the future may present issues for banks

Trading and M&A

  • Regulatory demands may remain high amid near-term policy ambiguity
  • A lack of policy and regulatory clarity may impact on what Deloitte says should be a strong start to M&A in 2017

Commercial and Transaction Banking

  • Uncertainty over US trade policy may induce re-assessments of global trade activity and the medium-term revenue pool in transaction banking
  • Banks will pursue the externalisation of service operations
  • Portfolio risks tied to volatile commodity exposures will require close monitoring

Payments

  • An aggressive move to faster, seamless and secure digital payments is expected to require heightened collaboration within and outside of the industry
  • Cyber security, IP protection and real-time payments are likely to top the risk and regulatory agenda for payments
  • Bots, biometrics and encryption are expected to become immediate technological priorities

Market Infrastructure

  • Consolidation to pursue new revenue streams and efficiencies is expected to remain a structural theme
  • Acceleration of the shift towards non-transactional revenue could see data becoming a strategic earnings driver
www2.deloitte.com
//
 

Global Expectations Pick Up

Janet Henry, Global Chief Economist for HSBC says there are many reasons to view prospects for the global economy in 2017 with nervousness – a new US president who campaigned on protectionist rhetoric; key Eurozone elections; the UK’s Brexit negotiations; plus challenges for emerging markets facing high debt and currency depreciation.

But she says, some things are looking up. The US economy is robust enough to raise interest rates again, China’s growth has held up better than feared and inflation is finally stirring worldwide. So, for the first time in five years, HSBC has increased its forecasts for global growth and inflation for the next two years. “We see world GDP growing by 2.5% this year and 2.6% in 2018, while inflation is forecast to hit 3% in 2017 before slowing a little in 2018,” she says.

HSBC has raised its US growth forecasts to 2.3% in 2017 and 2.7% next year on expectations of tax cuts for households and companies. European growth also looks set to be a little stronger than seemed likely immediately after the UK’s Brexit vote: “We expect 1.2% growth for both the UK and Eurozone this year and 1.3% in 2018.”

She warns that plenty of political and policy risks are evident too, which could impact in unpredictable ways.

www.hsbc.com
//
 

Sustained Growth for the UK Economy

In its monthly economic commentary for January 2017, the ONS has estimated that the UK economy continued to grow at 0.6% in Q4 2016, the same rate as the previous two quarters.

The sustained nature of recent economic growth means that GDP has grown 16.1% since the trough of the economic downturn in 2009 and is currently 8.7% higher than the pre-downturn peak level of output in Q1 2008.

For 2016 as a whole, GDP grew by 2.0% in 2016, close to the 2.2% growth seen in 2015, but some way below the average rate of calendar year GDP growth in the decade prior to the downturn (2.9%). Growth was also slightly lower than the average of independent forecasts made at the start of 2016, which was 2.2%.

www.ons.gov.uk
//
 

Lost Passports – How the City of London Hopes to Navigate a Hard Brexit

 

The Economist magazine argues that negotiating a bespoke deal for the City after Brexit will not be easy in the light of ‘hard Brexit’, where the UK will leave not just the EU but the European single market and says this was not what the City of London wanted to hear.

Although it says Theresa May did at least pick out finance, along with car-making, as an industry for which “elements of current single-market arrangements” might remain in place as part of a future trade deal, the City is holding out hope that a bespoke deal built on the existing legal concept of “equivalence” could still accord it a fair degree of access to Europe.

Passporting, which allows financial firms in one EU member state automatically to serve customers in the other 27 without setting up local operations, was always going to be difficult after Brexit.

It goes on to say that financial companies all have to firm up their contingency plans. For the City, these focus on so-called “equivalence” provisions, allowing third-country financial firms access to the EU if their home country’s regulatory regime is deemed equivalent. Currently only some regulations, such as those governing clearing houses and securities trading, contain the provisions. Much of finance, notably bank lending and insurance, is not covered. And even where the provisions exist, applying them will, in effect, be a political decision.

Optimists hope equivalence could not just form the basis of a feasible deal, but might even allow Britain to remove some onerous regulations. Jonathan Herbst of law firm Norton Rose Fulbright, notes that precedents exist for “variable geometry” in regulation. For instance, to gain access to American clients, some British clearing houses already submit to partial American regulatory oversight. If they deal in euro-denominated trades, nothing seems to stop them from submitting to, say, direct oversight by the European Central Bank without leaving London.

Such proposals may be stymied by cold political considerations. Equivalence determinations are at the full discretion of EU regulators, and the status can be withdrawn at short notice. Britain, as a current EU member, starts with identical rules. In a charged political environment, even a small future divergence could be construed as moving away from equivalence. For all the creative solutions proposed by lawyers in London, Europeans are not minded to let Britain off the hook by allowing it easily to “cherry-pick” sectoral carve-outs. Even before the Brexit referendum in June the ECB had sought to move euro clearing into the euro area.

But The Economist says, that is not a reason to dismiss equivalence altogether. It would seem strange, as Mr Herbst points out, to admit Canadian banks into the EU on the back of the recent EU-Canada free-trade deal under better terms than British banks. (Indeed, many Canadian banks have their main European presence in London.)

www.economist.com
//
 

Insights in brief…

  • Finance roles in the UK are set to experience the greatest rise in salaries this year according to the Robert Half 2017 Salary Guide. Roles in financial planning and analysis within large companies will get the biggest increase at 5.8%, while financial controllers should expect a rise of 4.3%, with salaries for financial planning and analysis managers in SMEs rising by 4.1%. Commercial financial controllers in a large company are set to receive a 4% increase. www.roberthalf.co.uk
  • Donald Trump chose to be US president over being CEO of his own company—a decision that an overwhelming majority of corporate executives say they would not make. When given the choice, 85% of corporate executives say they would rather be CEO of their own organization than lead the country, according to a recent Korn Ferry survey. www.kornferry.com
//
 
 
© InterExec 2017, All rights reserved