City harbours fragile green shoots

From the 11th floor of the Heron Tower, Albert Ellis has a good vantage point for assessing the health of recruitment in London's financial services sector. "There appear to be green shoots," he says, in his office above the heart of the City.

The chief executive of Harvey Nash - a technology focused recruiter that generates about a quarter of its overall revenue from financial services placements - is hesitant to declare a full-blown resurgence in City hiring.

"I'm quite cautious about saying, look, bank [hiring] is actually recovering, but there are green shoots in our business, and the revenues are ticking up," he says, adding that those green shoots are so fragile that, "if your big boot stood on them, they'd disappear under the ground again".

Harvey Nash says revenue generated from financial services increased by 10 per cent year on year to £75.9m, in the six months ending July 31.

Demand for risk mitigation and compliance staff is helping to drive the growth, says Mr Ellis.

Banks have been facing mounting UK and global regulatory requirements in recent years. Basel III has set out higher capital reserve standards that the world's banks must hold against losses, while the Bank of England has just laid out a framework for annual stress tests of the UK's biggest banks.

"IT systems are where the investment is going, to address the regulatory requirements and pressures," says Mr Ellis.

But hiring in financial services has started to move beyond only compliance and IT positions - which have been relatively resilient during the crisis.

Nomura, Citigroup and Bank of America are among the investment banks that have started hiring dealmakers and traders across Europe in recent months.

Chris Hickey, chief executive of Robert Walters UK., says clients are looking at expansion in different areas, not just areas like risk, compliance and audits. "They're actually looking at supporting some of their revenue-generating functions as well," he says.

Mr Hickey notes there has been a progressive increase, since the beginning of this year, in confidence among the white-collar recruiter's City clients to hire people and among staff to move jobs.

This sign of confidence follows a two-year period in which thousands of bankers lost their jobs. Last year Swiss bank UBS said it was cutting 10,000 staff over three years - threatening about 3,000 of its London-based staff.

There is mounting evidence that City recruitment has started to recover.

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Unadvertised vacancies for financial services staff in the UK earning more than £150,000 have increased by 38 per cent year-on-year, to 960, this year, according to InterExec, an executive search company. About 80 per cent of those vacancies were in London.

Astbury Marsden, a financial services recruiter, says that, in August, typically a quiet month for hiring, new City vacancies increased by 16 per cent to 2,490, compared with July.

Mr Hickey says: "Investment banks, especially the bulge brackets, have been hiring more readily." He adds that Robert Walters was likely to hire more consultants who place financial services staff in the City, if the trend continues. However, it is "hard to call" whether the momentum will be sustained.

James Lloyd-Townshend, managing director of City recruitment at UK-based recruiter Hays, says that, on the whole, employers in the City are more positive. "They are more confident to hire staff . . . [but] we aren't expecting recruitment activity in the City ever to return to pre-recession levels."

The green shoots that have emerged have been accompanied by caution among some City employers. Positive sentiment in the City is "tempered by caution and, as a result, flexibility [in hiring] continues to be key".

"Employers are looking for staff on shorter-term contracts, and employees are more inclined than before to look for non-permanent roles," he adds.

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