Rebellious junior dealmakers stay loyal to bank despite burnout: ‘Job market is a shock to many’

Junior bankers no longer revolt. More than a year after an uprising by a group of analysts at Goldman Sachs, which prompted widespread wage increases and an exodus of exhausted junior traders, many are deciding it’s best to stay put.

Banks have struggled to stem an exodus of junior bankers, with highly skilled young traders leaving brutal 100-hour weeks in the sector for everything from tech, fintech, crypto and private equity.

But widespread layoffs in the tech sector and at major crypto firms, along with a waning economic outlook marred by inflation, rising interest rates and the war in Ukraine, have forced many analysts to rethinking abandoning the bank, according to conversations with senior dealmakers and junior bankers. .

“A silver lining from this horrible situation is that juniors have realized the value of having a job that pays well and provides a sustainable career path,” said the head of investment banking at a European lender, who has declined to be named while discussing personnel issues. .

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“We had a lot of exhausted juniors who decided to quit, spend six months recuperating with mom and dad, and then look for tech jobs,” he added. “The fact that the labor market has turned around will come as a shock to many, who have instead decided to stick with banking.”

The global head of transactions at a Wall Street bank, who declined to be named to discuss personnel matters, said Financial news that analysts who quit for tech jobs last year were now trying to return to the bank. “There’s a lot more common sense there,” he said. “Job insecurity can do incredible things for the psyche and juniors enjoy the benefits of working for a stable platform.”

Graduate training programs in investment banking are notoriously intense. Juniors are expected to be available to senior negotiators, who request last-minute changes to client presentations and demand accuracy during long hours of dealing with numbers. Meanwhile, deals can drop at any time, including weekends and holidays, making work unpredictable and downtime difficult.

While negotiators have long heralded this as a necessary apprenticeship, the new generation of junior bankers has pushed back. An investigation into “working conditions” leaked by 13 San Francisco-based Goldman Sachs analysts in March 2021 has gone viral, describing brutal working hours and declining mental and physical health. Analysts quit en masse, with up to 70% of teams disappearing at some banks.

Goldman responded by increasing recruitment of juniors and raising pay – to $110,000 in the US and £70,000 in the UK, from $85,000 and £50,000 respectively. Every big rival has also raised salaries for analysts and associates at least twice in the past year, while boutique players such as Evercore and fintech specialist adviser FT Partners are now opening the path to compensation.

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But beyond big salaries, juniors remained skeptical of any widespread cultural change, FN reported, while senior bankers said long hours were likely to remain.

Despite this, juniors are more willing to stay in the industry.

“Investment banking professionals stay put,” said Claudio Antonini, a former investment banker turned career coach who works with finance professionals. “I have worked with clients who have decided to put their move on hold due to market conditions.”

“There are definitely fewer people leaving or wanting to leave,” added a second-year analyst at an independent investment bank in the City. “This is largely fueled by dire macroeconomic conditions and the resulting lack of exit opportunities, whether private equity or otherwise.”

When Covid-19 hit in early 2020, banks rushed to provide funding to shore up the balance sheets of companies hit by the turmoil. The juniors, who were cooped up at home and working remotely just months after starting work, faced increased demands from their superiors. A record boom in deals in 2021 – in mergers and acquisitions and capital markets – has put additional pressure on juniors and triggered a burnout crisis among those at the bottom of the ladder.

An analyst at a Wall Street bank in London said mergers and acquisitions juniors were still working long hours as activity remained high and people stuck to it. “Fewer people are leaving this year,” he said. “There’s definitely a feeling of being safe in a big, stable bank if you’re performing well.”

Despite the reputational blow from the scrutiny of the mental health of young bankers over the past year, the bank remains a popular choice for top graduates. Both Goldman Sachs and JPMorgan have seen an increase in job applications of around 20% this year, while that figure has remained stable at Citigroup. Numbers vying for graduate positions at Credit Suisse, HSBC and Morgan Stanley have all fallen from record lows in 2021, but they remain above historic numbers.

Jaime Blaustein, a former Credit Suisse investment banker who now runs the Sylvia Brafman Mental Health Center, said the job is unlikely to change. His company has approached banks about mental health initiatives, but few have shown interest, he said. Most simply waited for the fury of working hours to die down, he added.

“The grueling circumstances that contribute to anxiety and depression may never go away in this industry given the embedded culture,” he said. “But what’s really too bad is that banks aren’t taking sustainable action to really address the mental well-being of employees – it’s mostly smoke and mirrors.”

The head of UK mergers and acquisitions at a European City bank, who requested anonymity, said banks still had a lot of work to do to retain juniors. “My generation saw banking as a lucrative and worthwhile career,” he said. “Today’s juniors generally see it as a profession, which will open doors for them to something else after a few years. It’s up to us to prove to them that investment banking is a long-term career.”

Meanwhile, an almost 50% reduction in investment banking fees so far this year has prompted banks such as Goldman Sachs, HSBC and Berenberg to cut jobs. While Goldman largely spared first-year analysts when it cut 1-5% of the workforce recently, RBC Capital Markets targeted juniors when it cut 10 U.S. investment banking jobs in September. and the Deutsche Bank cuts unveiled on October 19 included junior bankers. Further cuts are expected.

“It could be a dark winter for those who are ready to quit but are holding back due to market news,” Antonini said. “Their bank could fire them. Some banks have already implemented restructuring programs and they could be in the market at a time when everyone else is in the market. This would reduce their chances of getting a job quickly. Burnout is still an issue as workloads have not diminished. »

To contact the author of this story with comments or news, email Paul Clarke

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