Negotiators have a new reason to come to the office: to avoid job cuts.
Banking executives continue to preach the benefits of hybrid working, but dealmakers say they’re under pressure to get back to the office — or hit the road — as companies brace for another wave of layoffs amid a slump revenues.
“When everyone was confined and working remotely, we were all equal. Now that there is an option to travel and be in the office, competitively, we will find out what is best,” said Bob Diamond, a former Barclays boss who is now managing director of private equity firm Atlas Mara. .
“In the first big downturn, if a large organization needs to downsize, who do they cut? Remote people or people in the office? It will be an interesting test.
This time last year, banks were raising wages, offering guaranteed bonuses and counter-offers to departing employees. That was when transactions skyrocketed and 2021 freight charges hit a record $130 billion, according to data provider Dealogic.
But banks are notoriously quick to cut jobs when incomes fall, and fees have fallen 38% globally this year, with $24 billion wiped out from the first six months of 2021.
A 74% drop in equity capital markets fees to $2.6 billion puts jobs in those divisions at particular risk. Berenberg has already cut 50 jobs in New York, Financial News reported, while UBS cut ECM bankers and Credit Suisse cut some roles as part of a broader cost-cutting program. Recruitment has slowed across the board, with headhunters suggesting some city banks have begun de facto hiring freezes until activity picks up.
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“It’s important to perform, but it’s probably just as important to be seen,” said a mid-tier banker. “If your boss is in the office, it’s a good idea to be there too.”
“Banks are very likely to make cuts later this year as revenues have fallen,” said Stephane Rambosson, co-founder of executive search firm Vici Partners. “The question is more about the magnitude and timing of these more than anything else. Spending more time in client meetings or in the office than your colleagues could make a crucial difference in some cases.
Face-to-face time – a term often used in banking to describe long hours in the office even when there is no work – is back, according to conversations with seven senior bankers. Even in organizations that have formal hybrid work programs in place, negotiators show up most days when they’re not traveling for business.
Adrian Crawford, a partner in the employment practice at Kingsley Napley solicitors which focuses on financial services firms, said investment banks often use ‘hidden criteria’ when making bonus decisions and layoffs.
“In an industry where bankers are expected to work long hours for fun, being in the office and being seen, rather than home and being forgotten, could be a big deal as banks begin to cut spending,” did he declare.
At Bank of America, Goldman Sachs, Citi and Barclays, among others, a five-day office week with some flexibility is the norm for bankers, dealmakers said. FN. Most JPMorgan traders work four days a week with more top executives coming in daily, according to insiders.
Around 60% of London-based JPMorgan staff are in the office on peak days, according to a person familiar with the matter, while the proportion is now also above 60% at Goldman Sachs’ UK headquarters in Plumtree Court. Both banks now track employee attendance via swipe ID cards, according to the people.
“It’s basically back to pre-pandemic life now,” said a senior trader at a US investment bank. “We are in the office when we are not travelling. It’s tough, but better than 12 hours of consecutive Zoom calls.
“The routine is four days at headquarters and maybe a day at meetings, usually around Mayfair,” said another chief executive of a UK investment bank.
In November, the managing director of Deutsche Bank in the UK and Ireland, Tiina Lee, told a conference that 98% of her employees had hybrid work in place, but that excluded investment banking. Credit Suisse boss Thomas Gottstein said Bloomberg in May that a full-time return to the office was “unrealistic”, but three senior bank negotiators contacted by FN said most people were in the office when not traveling for business.
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Some bank bosses have made no secret of the need to return to the office. Jamie Dimon, chief executive of JPMorgan, said in 2021 that working from home was not working for “young people” as well as “those who want to hustle”, while Goldman boss David Solomon said the remote work was an “aberration that we will correct as soon as possible”.
More recently, Jefferies encouraged its top dealmakers to return to the office because “many of our mid-level and junior-level colleagues rightly feel let down.” Rich Handler, the bank’s chief executive, said in an Instagram post in June that bankers should use remote work in a “limited way”.
“If you want a career, engage with the rest of us in the office and only use WFH when you’re smart,” he wrote.
Senior bankers consistently cited the need to encourage junior bankers to return to the office to train them for a role where on-the-job learning is essential. Analysts and associates in London said FN that they are now expected to arrive almost daily.
“What has changed is that we can leave the office, go out to dinner or go to the gym and then reconnect from home. It’s a certain level of flexibility – before, we expected this that we would stay until 2 or 3 a.m. in case work arrived, which made no sense,” said a junior from a US bank.
To contact the author of this story with comments or news, email Paul Clarke