London Banks: Nice Work if You Can Get It
Texto de matéria do The Wall Street Journal, 12/mar/2009: http://online.wsj.com/article/SB123680788396700541.html
By JENNIFER MARTINEZ
Sevla Gonca entered Oxford's Saïd Business School last fall with plans to emerge this year with an M.B.A. degree and a job in London's banking sector. But the global financial crisis -- and the big bite it has taken out of the city's financial-services industry -- has already changed the arc of her future.
Banks are barely hiring here, if at all. Job opportunities that were abundant two years ago have all but dried up. So people like Ms. Gonca, who planned to spend 15 or 20 years in banking, are devising Plan B's and C's.
"People are just demoralized," says the 25-year-old Ms. Gonca, who is now shifting her attention away from banking and toward positions at large retail, oil and consumer-goods companies. "If the markets are like this, maybe I can go into a different industry and learn and at the same time practice finance."
A generation of students who entered business school aiming to get in on London's financial boom is about to graduate to a very different reality -- and having to adjust to a world of scarce jobs and reduced financial rewards. At places like the London Business School and the London School of Economics, soon-to-graduate students are coping with the fact that the financial sector has shed tens of thousands of jobs, with more cuts likely on the way.
Meanwhile, the ailing financial health of many banks here -- not to mention the public outcry over bonus payments at banking institutions that have received government assistance -- virtually ensures that compensation in banking in coming years will be far less than it recently was.
The U.K. finance sector was regarded by business students for years as the place where the big salaries were to be found, according to Adam Dixon of consulting firm Oxford Analytica.
The average base salary for M.B.A. graduates in recent years was £60,000, or about $82,000, in the first year with a potential bonus of £100,000, according to London-based banks.
At the end of the third year, the potential total compensation could rise to roughly £500,000 depending on the performance of the firm, the group the employee works in and the employee.
Remuneration Reasons
Salary and compensation rank high on the list of reasons why students choose careers in banking and finance over other industries, said Neha Budhdev, a third-year student at the London School of Economics.
The large paycheck banking and finance jobs offer employees "attracts everyone who's intelligent and young and wants to get money quick," Ms. Budhdev says. She received four internship offers last year from securities firms, but came up empty-handed during the firms' recruitment round this year.
The glut of graduates flocking to financial firms in recent years made recruitment difficult for other industries competing for top talent. For example, about 44% of the London Business School's 2008 class landed jobs in the financial-services sector, with a quarter of the class concentrated in investing-banking positions, according to the school's 2008 employment report.
But that mix is expected to shift dramatically this year, with many graduates forced by circumstances to seek positions in other industries.
Mr. Dixon recently spoke with a large multinational oil company that has happily noticed a spike in job applications from rising business-school graduates. The company says the increase in interest from high-caliber job candidates compares favorably with other recession periods.
'No Bargaining Power'
"There's just no bargaining power for high wages" in banking, Mr. Dixon says of the current state in the industry. That is bad news for the students who flocked to the U.K.'s top business programs in hopes of cashing the hefty paycheck that often came with it.
It isn't hard to see why many of the world's brightest students came to London. Schools trumpet the city as the Wall Street of Europe. London boasts "43 percent of the global foreign equity market," houses "more international banks than any other city" and is dubbed "the world's best-connected city," according to the London Business School on its Web site for prospective students.
Now, investment-banking and financial-services jobs in the U.K. will suffer a 28% and 10.7 % cut, respectively, in 2009, the Association of Graduate Recruiters reported last month based on survey responses it collected from 419 employers, including U.K.-based Barclays Bank PLC and government-owned Lloyds Banking Group PLC and Royal Bank of Scotland Group PLC.
"You're trying to fight a tsunami and hold on to something at this point," Rohan Shanbhag, a second-year student at the London Business School, says of the attitude among students toward the job search this year. "My strategy is to look at all the options and pick based on the quality of firms."
Write to Jennifer Martinez at jennifer.martinez@wsj.com
Printed in The Wall Street Journal, page C2
By JENNIFER MARTINEZ
Sevla Gonca entered Oxford's Saïd Business School last fall with plans to emerge this year with an M.B.A. degree and a job in London's banking sector. But the global financial crisis -- and the big bite it has taken out of the city's financial-services industry -- has already changed the arc of her future.
Banks are barely hiring here, if at all. Job opportunities that were abundant two years ago have all but dried up. So people like Ms. Gonca, who planned to spend 15 or 20 years in banking, are devising Plan B's and C's.
"People are just demoralized," says the 25-year-old Ms. Gonca, who is now shifting her attention away from banking and toward positions at large retail, oil and consumer-goods companies. "If the markets are like this, maybe I can go into a different industry and learn and at the same time practice finance."
A generation of students who entered business school aiming to get in on London's financial boom is about to graduate to a very different reality -- and having to adjust to a world of scarce jobs and reduced financial rewards. At places like the London Business School and the London School of Economics, soon-to-graduate students are coping with the fact that the financial sector has shed tens of thousands of jobs, with more cuts likely on the way.
Meanwhile, the ailing financial health of many banks here -- not to mention the public outcry over bonus payments at banking institutions that have received government assistance -- virtually ensures that compensation in banking in coming years will be far less than it recently was.
The U.K. finance sector was regarded by business students for years as the place where the big salaries were to be found, according to Adam Dixon of consulting firm Oxford Analytica.
The average base salary for M.B.A. graduates in recent years was £60,000, or about $82,000, in the first year with a potential bonus of £100,000, according to London-based banks.
At the end of the third year, the potential total compensation could rise to roughly £500,000 depending on the performance of the firm, the group the employee works in and the employee.
Remuneration Reasons
Salary and compensation rank high on the list of reasons why students choose careers in banking and finance over other industries, said Neha Budhdev, a third-year student at the London School of Economics.
The large paycheck banking and finance jobs offer employees "attracts everyone who's intelligent and young and wants to get money quick," Ms. Budhdev says. She received four internship offers last year from securities firms, but came up empty-handed during the firms' recruitment round this year.
The glut of graduates flocking to financial firms in recent years made recruitment difficult for other industries competing for top talent. For example, about 44% of the London Business School's 2008 class landed jobs in the financial-services sector, with a quarter of the class concentrated in investing-banking positions, according to the school's 2008 employment report.
But that mix is expected to shift dramatically this year, with many graduates forced by circumstances to seek positions in other industries.
Mr. Dixon recently spoke with a large multinational oil company that has happily noticed a spike in job applications from rising business-school graduates. The company says the increase in interest from high-caliber job candidates compares favorably with other recession periods.
'No Bargaining Power'
"There's just no bargaining power for high wages" in banking, Mr. Dixon says of the current state in the industry. That is bad news for the students who flocked to the U.K.'s top business programs in hopes of cashing the hefty paycheck that often came with it.
It isn't hard to see why many of the world's brightest students came to London. Schools trumpet the city as the Wall Street of Europe. London boasts "43 percent of the global foreign equity market," houses "more international banks than any other city" and is dubbed "the world's best-connected city," according to the London Business School on its Web site for prospective students.
Now, investment-banking and financial-services jobs in the U.K. will suffer a 28% and 10.7 % cut, respectively, in 2009, the Association of Graduate Recruiters reported last month based on survey responses it collected from 419 employers, including U.K.-based Barclays Bank PLC and government-owned Lloyds Banking Group PLC and Royal Bank of Scotland Group PLC.
"You're trying to fight a tsunami and hold on to something at this point," Rohan Shanbhag, a second-year student at the London Business School, says of the attitude among students toward the job search this year. "My strategy is to look at all the options and pick based on the quality of firms."
Write to Jennifer Martinez at jennifer.martinez@wsj.com
Printed in The Wall Street Journal, page C2
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