There’s a time when ‘investment bank’ and ‘apprenticeship’ would not have typically been mentioned in the same sentence.  Well times have changed and even in these cost stringent times of shareholder scrutiny, organisations like Goldman Sachs are lining up to take on the Ladder for London Scheme – as highlighted in an issue of last week’s Evening Standard.

Upon joining the scheme employers are presented with a shortlist of candidates to interview and select an individual for 12 months, pay them at least £8.30 (the London living wage) for a at least 30 hours a week and release them one day a week to complete their NVQ. The government may also give some employers cash incentives for taking apprentices.

Over the past few years its been evident that skilled workers have been more valuable and hired more often than graduates or career changers despite the cost difference in salaries.  Student debt is growing and becoming a concern, university costs in America have gone over the $1 trillion mark and has over taken credit card and car loan debt (still a long way off mortgage debt) but its the second highest debt in the US and with an uncomfortable default rate of 21% it’s not looking like a wise move for an individual interested in ‘higher education’.

Is banking going to lead the way back to on the job training?  Rather than off-shoring are they going to take apprentices?  Maybe training contracts will become commonplace for people to learn banking basics.  In the same way that a temporary position can enhance a skill set very quickly, could young, bright individuals see a career path in on-the-job training rather than going to university? I definitely think a university education has its place but equally, I believe that more apprenticeships will ultimately help to boost the economy.

The ‘hidden costs’ that some may see in giving your time and energy to developing the individual is an unfortunate way to view such a worthwhile scheme but a serious consideration for a small or medium sized business.  Giving individuals the chance to succeed and seeing this actually happen, I think well lead to a lot of businesses keen to sign up to this scheme in time – especially with global heavyweights like Goldman Sachs setting the example.

What would you get an apprentice to do in your firm?

apprenticeships, Banking, Goldman Sachs, investment bank, Ladder for London

The global financial services market has seen continued instability, particularly across the eurozone which has created an extremely challenging operating environment.

Earlier this month we published our April London Employment Monitor which recorded the highest level of City jobs in six months. An area of hiring which is important to watch is IT services in banking.

Technology trends such as cloud computing, mobile application development and payment transactions are making technical hires in banks essential. Furthermore the gadget savvy traders and analysts in the larger banks have an increasing reliance on data access across all devices including mobile.

For the banking industry to continue to drive innovation and excellence the hire of talented IT professionals to drive the business forward is becoming more crucial than ever. IT professionals are recruited within various roles in the financial services industry and we have identified 7 Hot Skills Areas:

You can read more of my comment piece in today’s copy of CityAM.

Lloyd Wahed, Manager Morgan McKinley Technology

Banking, banking industry, Cityjobs, cloud computing, data mining, employment monitor, Financial Services, innovation, jobs, London, mobile application, payment transactions, technology talent

This seems to be a topic which is often covered in conversations within our office.

The compliance and regulatory markets have been growing at an alarming rate since the demise of Lehman Brothers and the start of the recession, and it seems whilst some other middle office functions have had steady growth, the compliance market has seen some astronomical growth, both within sell side and buy side organisations in London.

With the FSA introducing new policies and procedures on a regular basis, does this mean that the compliance markets are likely to continue growing for the foreseeable future?

Morgan McKinley has continued to see a demand for compliance ‘talent’ for the past three and a half years, especially within sales and trading compliance and Anti-Money Laundering (AML).

With the introduction of the new regulators in 2013, will this mean that the compliance market will continue to see growth above other markets? …I think so!

Banking, City of London, Compliance, Financial Services, FSA, regulation

From the credit crunch in 2008 to the eurozone crisis in 2011, risk management has never been so topical. This was evident last night, when more than 60 financial services professionals attended our exclusive risk debate at One Moorgate Place.

We were lucky to have some of the City’s most senior risk specialists in attendance, along with a distinguished panel consisting of a leading editor from a well known City newspaper, a senior risk representative from a UK regulatory body as well as a global head of risk methodology from a leading investment bank.  This all led to thought-provoking discussion and some sharp intellectual sparring! Abiding by the Chatham House Rule, I can’t tell you what was said, but here are some of the topics that were discussed. I’d love to hear some of your thoughts as well – let the debate continue…

1. Although numerous causes of the 2007/08 credit crunch have been mooted, many experts feel that the crisis was, “not a natural disaster, but the result of high risk, complex financial products, undisclosed conflicts of interest and the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of major financial institutions.”
   
   Why was risk management not able to prevent such a global meltdown?

2. In recent years there has been major regulatory reform across the financial services sector, as well as a huge drive to ramp up risk management frameworks. Barely four years have passed since the last global economic crisis and we again find ourselves in another one, this time on a more sovereign scale with the eurozone crisis.
   
   Having concentrated on developing micro risk management tools, along with more in-depth analysis from a credit perspective, why is it that the macro-level risks were seemingly ignored?

With the new measures in place, do we now feel confident from a risk management perspective, that we are better positioned to recognise signs of an impending crisis? And what are the key areas to be wary of moving forward?

(L-R) Eduardo Epperlein – Global Head of Risk Methodology, Global Risk Management, Nomura, Allister Heath – Editor, City AM,  Michael Wardle – Head of Market Risk and Trading Review, FSA.

2012, Banking, Banking crisis, eurozone crisis, Financial Services, Risk, risk management

ICB Chairman, Sir John Vickers this week published a report which he feels will ultimately safeguard the UK banking system and separate the ’casino’ style risks the City has been perceived to be taking with domestic savings. Two of the main highlights of the report are: 1) ring-fencing domestic deposits and leading banking away from ’trading-book’ activity; and 2) increasing the capacity to absorb losses.

Ring-fencing

Separating retail banks and wholesale/investment banking divisions is a move seen to be protecting the taxpayer. The implications of this though are flexible and, somewhat murky at this stage as banks will be lobbying to understand exactly what levels of flexibility there will be. The fact that ’universal’ banks will no longer be able to cross-sell products to one anothers customers and in effect work in a ’third-party’ style of relationship will have a number of potential outcomes. This will also affect organisational structures as retail banks must now have boards of directors independent to investment banking divisions – in theory creating different company cultures.

This is one step removed from the separation of the universal banks, but in itself does also create opportunity. As organisations restructure, there will be opportunity for new talent to come in approaching things with fresh eyes and the potential to guide the implementation of the report’s recommendations and ensure the future rigour of the firm. We may see, new departments and role functions created to be the interface between the parts of the business either-side of the ring-fencing.

Increasing the capacity to absorb losses

Enhanced regulatory control over the sector is nothing new and it is important to remember that there are already measures in place such as Basel II and the subsequent implementation of Basel III.

The Vickers Report is suggesting that UK banks will need to exceed internationally agreed Basel III recommendations against risk weighted assets (RWA) to somewhere closer to 17-20%. This will have huge implications for the sector, particularly as banks are already struggling to raise capital in the current economic climate.

The impact of all this on the recruitment market may at first sight appear bleak, however there are absolutely opportunities for certain areas of the recruitment market to flourish through this transition period.

The demand for individuals with regulatory (Basel III), Capital allocation and RWA experience is already high and will now will go through the roof; creating more opportunities for people to enter this specialised area. As the importance of these functions is instilled throughout the industry, we expect to see more candidates seeing regulatory risk management as an area they can enter and continue to grow and develop their careers as the perception is they will always be in demand.

Summary

It is important to remember that this legislation will affect only the UK banks. There is a feeling that the Vickers Report could create a two-tier banking system. Banks that are affected by the ring-fencing will need to safeguard their staff from overseas banks operating in the UK as they will not be affected by the reforms. These firms may be seen as more attractive options to staff due to the comparatively lower amount of red-tape.

The next few months will be telling as banks will be lobbying hard to minimise the impact and cost of this legislation. There is still a large grey area in the policies outlined which will need to be clarified to ensure transparency throughout the industry.

The Chancellor George Osborne has vowed to give clarity on how this legislation will be put into place by the end of the year. Until then, we will all wait and follow with interest…

Banking, banks, Financial Services, legislation, profits, retail banking, Tax, Vickers, Vickers system

As many of you who work in the financial services sector are aware, this week signifies the two year anniversary of the collapse of Lehman Brothers. Images of that historical day are still vivid in memory; graduates turning up for their first day of work only to be told to turn around and go back home. Similarly, the more experienced and dedicated, long-serving employees, packing up their desks and walking out, clearly shell shocked that such a huge, Wall Street institution could fail in such a manner. Little did everyone know that this was to be the start of a long and arduous period in the UK, and the global economy.

Although the sub-prime problems were in full swing by the morning of 15 Sept 2008, Dick Fuld’s inability to consider the bank’s 25,000 employees and let his business collapse further fuelled the events that were to follow. Stock markets plunged to levels that had not been witnessed since another history changing event that took place in September seven years previous. A number of other banks had to be bailed out / nationalised to prevent further financial ruin in the market and of course, millions of people were made redundant.

Many have argued and petitioned for tighter regulation in the markets. What used to be a free and open market has now seen a number of initiatives / solutions been set to ensure another downturn of this nature does not occur again. Although not actually implemented as of yet, President Obama has endorsed the Volcker rule, which would essentially prevent banks from engaging in proprietary trading, and also ownership of hedge funds or private equity businesses. Furthermore, Angela Merkel decided at the turn of 2010 to ban naked short-selling as a result of the threat of a potential collapse of the Euro. The latter in particular highlights the problems faced across Europe – Ireland, Spain, Portugal and Greece have all had to face and fend off the threat of sovereign default.

The most recent change to global banking is the Basel III regulation. This requires banks to increase capital so they can be prepared for distress situations. Although the new regulations will not be fully implemented until January 2019, work has begun to ensure that tier 1 ratios hit 6-8% by that time. This transition is particularly important in that it doesn’t present another credit crunch crisis, with institutions not lending money in order to protect their capital adequacy ratio from falling.

Much has happened in the two years since the collapse of one of the most reputable banks on Wall Street. Aside from the above, the UK has witnessed a change in Government, which has highlighted the importance of austerity. The country returned to growth in the last quarter of 2009 and at the start of 2010 it was confirmed that the UK had come out of recession – one of the last major economies in the world to do so. This growth has continued within the financial services sector with headcount increasing exponentially (particularly in Q1), compared to 12 months ago. Where they previously cut too deep following the collapse, institutions are now looking to add resources to compensate for additional business flow this year.

In conclusion, whilst it has been mooted that it could take another 10-20 years before the associations of Lehman Brothers are completely wound up, it is hoped that if the threat of a double dip isn’t realised and hiring continues at its current rate, it will be a lot sooner before the UK economy can return to greater times.

Austerity, Banking, Basel 3, Credit crisis, economy, Financial Services, Lehman Brotheres, recession, Sub prime, Unemployment, Volcker Rule