How secure is your investment banking job?

The recent dive in the global stock markets has caused some unfortunate individuals to dive from a roof and many investment bankers see themselves taking huge pay cuts or even be going out of work if the woes continue.

One J.P. Morgan analyst, Kian Abouhossein went as far as saying 35 year-old bankers who lose their jobs in 2015 may never get rehired.

"2015 is not going well. After the chaos of August, banks’ revenues could fall all the way through to 2017. And not just in fixed income sales and trading, equities traders are also expected to suffer and investment banking division deals could be postponed due to volatility," he explained.

"That’s bad news if you’re say, a senior person at a bank with high and inflexible costs. If your job looked insecure in July, it looks even more insecure now the holidays are over," he told efinancial careers.

He added costs have become the key battleground in investment banking and redundancies in the third and fourth quarters look inevitable.

Another London-based fixed income search consultant who wished to remain anonymous said  most banks are already imposing hiring freezes for the rest of this year. “If you lose your job at a big bank now, you’ll need to pitch yourself to third tier places or the buy-side.  The emphasis at all the big houses is on cutting costs.”

The quickest way to cut costs is to re-base pay with an army of eager juniors. “Banks today are putting a lot more emphasis on the staff pipeline.  They’re much more tied in to hiring from schools than they used to be.” says Jeanne Branthover, global financial services leader at Boyden in New York.

She explains why its not hard for young talent can easily replace the veterans.  "The job has become more straightforward, you can’t trade half the stuff you used to trade. Banks just need someone to sit there and do the job without expecting to get paid too much. The guy who used to earn $1m and is now on $300k will always be resentful. There’s no need for that person any more.”

In order to keep their jobs, Branthover said some senior finance professionals are preemptively moving into new roles, even if they pay less. “I recently moved someone who took a 10% cut in his base salary and was facing a likely 20% cut in his bonus.  The bank he was working for wasn’t focusing on his business area any more and he was concerned about this job security." she said.

Another fixed income trading search firm in London who requested not to be identified said investment banks are looking to cut cost by hiring cheaper young talent and no longer willing to hand out large salaries to veterans.   “We spoke to a client last week who told us their priority now is hiring ‘young enthusiastic people who understand the new pay-scales in investment banking.  There are plenty of people who are more than happy to earn a low six figure package.  Banks now have no interest in hiring the 30 and 40 somethings who can remember the seven figure pay days of the past.  Even if those people do say they’ll accept less, they’re always going to be bitter and twisted about it.”  he said.

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