Shell bid for BG is latest lift to City's financial services jobs

All the City needed to underpin the returning confidence in financial markets was a multibillion pound bid for a British company. On Wednesday it received exactly that in the form of Royal Dutch Shell's approach for BG Group.

The takeover, which values BG's debt and shares at $56bn, marks the biggest of a UK company, according to Dealogic, whose records go back to 1995. It is the latest in a series of deals that have lifted City spirits and boosted the jobs market in the Square Mile in recent months.

Wednesday's news of Shell's approach coincided with a trading update from City white-collar recruiter Robert Walters, regarded by many as a bellwether for the UK economy as well as the City. The company announced a sharp increase in the fees it receives for placing staff - notably risk and compliance support staff - in the financial services sector.

Headhunters say the hiring of top rainmakers started slowly this year but following the recent escalation of M&A activity, has been picking up fast.

"There has been an increase in confidence in banking. Deals have kick-started a bit of a merry-go-round among the heads of M&A teams at several big banks," says one financial services headhunter.

She highlighted the changes at Bank of America Merrill Lynch which on Wednesday promoted Diego De Giorgi and Karim Assef to co-heads of global investment banking to help steer the next phase of growth. Rival US bank JPMorgan has also recently brought in new heads of M&A.

"A lot of talent was let go and is now being hired back either because the banks have deals in the pipeline or anticipate a big rise in activity," the headhunter added.

The total value of announced deals in the UK has reached $143.3bn so far this year, more than five times the value recorded in the same period last year and the highest level year-to-date since 2000, according to data from Thomson Reuters.

Capital markets have also burst back to life with FTSE indices touching new highs and record numbers of new companies joining the UK stock market. There were 120 initial public offers worth £27m in total, according to Dealogic - the highest amount raised by new entrants to the London markets since 2007.

That has boosted the fees of UK bankers and brokers, big and small. The three advisers on The Shell/BG deal could share an estimated $182.6m in fees according to Thomson Reuters and Freeman Consulting.

At Cenkos Securities, the £30m fee it netted as sole adviser on the flotation of UK roadside recovery service the AA drove an overall increase in revenues by 72 per cent to £88.5m in 2014 and profits before tax increased 152 per cent to £27m. Last week Shore Capital reported that a 13 per cent rise in revenues in 2014 lifted profit before tax by 54 per cent to £8.31m. Rival brokers Panmure Gordon and N+1 Singer also reported strong results for 2014.

Brokers warn that there may be a temporary lull in activity in the run up to the general election on May 7. So too does the economic think-tank the Centre for Economic and Business Research, which says financial services employment in London is still a long way behind the peak. Jobs dropped 6 per cent in 2013. Last year, the number of jobs began to stabilise, falling just 1 per cent to about 360,000 during 2014. The think-tank forecasts an increase in jobs of perhaps 1 per cent this year but says that the general election and questions over Brexit will hold the job market back.

Recruiters are more bullish, reporting clear signs of a permanent return of confidence.

Robert Walters said that group net fee income rose 15 per cent in the first three months of this year to £53m and fee income in the UK increased 22 per cent in the first quarter to £18.6m. Significantly, this was driven by an upturn in permanent recruitment activity across both London and the regions. Increased income from placing permanent staff indicates improving business confidence generally - employers tend to prefer temporary hires when they think the economic outlook is uncertain.

Alan Bannatyne, chief financial officer at Robert Walters, said: "In terms of the feelgood factor, we've got across the tipping point . . . Underlying confidence levels among both candidates and clients are on an upward trend." He said salaries rose about 3 per cent above inflation in professional services roles.

This is good news for the bankers, which suffered more than some of their counterparts in Europe.

Data collected by the European Central Bank showed that jobs at UK banks fell faster than in most EU countries in the post-crisis years. Between end 2008 and end 2013 UK banks shed about 14 per cent of their workforce, compared with an average 9 per cent fall across the 27 countries that then made up the EU.

In the past year, however, sentiment has changed and banks have looked to replenish their top talent, many of whom are now working at independent advisory firms. Robey Warshaw, a small boutique run by City deal veterans Simon Robey and Simon Warshaw, was only one of three advisers on the Shell/BG deal.

Mr De Giorgi of Bank of America Merrill Lynch agrees that the recruiting market has become more competitive. "There are a lot of other places looking for our talent," he said, adding that demands from boutiques and shadow banking "get into all of our levels of seniority".

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