Jobs Investment Banking Frankfurt – If you ask Thomas W. what the mood is in the industry, he answers emphatically: “Desperation.” “There are a lot of people with nothing to do,” W says. You don’t need so many bankers anymore.
W, who does not want his real name published, is eating pizza at an Italian restaurant in downtown Frankfurt. He himself was once a stock trader at a major German bank – back then, in the golden days at the turn of the millennium. But his work does not exist today. Stocks are now increasingly traded through algorithms. W. now does capital markets business for corporate clients of a small private bank. Still a decent job – but the golden days for those like him are over. “It won’t be the same,” W says.
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The banking industry is in deep recession. The financial crisis and its aftermath not only destroyed the financial foundations of the previous billion gains. The reputation of the profession has also been severely damaged in the last ten years. Banker, once a respectable job, today many employees have to listen to ridicule and insults. Their jobs, both at a nearby branch and at the bank’s head office in Frankfurt, are considered to be in serious jeopardy.
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All that remains is good pay. This already applies to collective wages. In a branch of a private bank, a customer advisor can quickly earn more than 4000 euros per month. But when many employees in corporate headquarters, investment banking or asset management are paid more than the contract wage, this becomes even more evident. There, six-figure annual salaries are more the rule than the exception. And for some people it even reaches seven figures.
How does it fit that the industry is doing poorly on the one hand and paying so much on the other hand?
Klaus Biermann sits in his office in Frankfurt’s chic West End – the bank towers are just a few hundred meters away. Beerman is a bounty hunter. He is wearing a dark blue suit and silver cufflinks. Their job is to find the right top employees for banks.
Beerman has seen the face of the industry change in recent years. “The financial industry is not what it used to be,” he says. “Enterprise calculated.” Still, Bierman says, salaries are “still pretty good on average, even if they’re actually going down. Fees are too high for a lot of banks.”
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After the financial crisis ten years ago, the banking industry was frozen in a kind of shock. Fear of downsizing is ubiquitous in many organizations. Insiders report poor morale and lack of employee motivation. “Where there’s a crisis, there’s often not much left to do,” says one. “People spend their time looking for places to stay.”
The fear of losing your job is completely justified. The financial sector is the only branch of the economy in Germany where, despite a general employment boom, the number of employees has been steadily declining over the years. While 774,000 people were still employed in the German banking industry in 2000, the number was only 609,000 at the end of 2016, a decrease of more than 20 percent.
One of the drivers of development is the increase in digitization. It doesn’t need as many people as before. Another reason is the legacy of the financial crisis: many capital market businesses today are worthless.
But higher salary plays an important role. Personnel costs are one of the largest set of costs in banks. At Deutsche Bank, for example, they eat up more than a third of revenue each year. As of 2015, total compensation for around 100,000 employees was reliably around €10 billion. This is an average of €100,000 per full-time position. What other industry pays its employees so well?
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Even the European Union couldn’t do anything about it, although after the financial crisis it aimed to stop excessive bonus payments. As of 2014, these variable pay components must be in a specific ratio to fixed pay – usually one to one. Bonuses can be doubled with shareholder approval. But the banks responded – and simply paid higher fixed salaries. The amount of salary remains – only now a large part is fully guaranteed. This was probably not what the inventor had in mind.
This growth was once again particularly evident at Deutsche Bank, which continued to pay similar salaries despite billions in losses. Only early last year, the bank’s new management briefly put the brakes on and canceled a large portion of the 2015 bonus payout. The bank had been in talks for the 2017 bonuses last year. And significant pay cuts compared to last year are likely to remain the exception for most German bankers. Fears of losing key investment bankers are high. “After last year’s bonus, morale is very bad,” reports one employee. “They won’t do it again.”
A really big bonus is going extra. But especially in investment banking, banks must continue to pay their top employees higher so they don’t turn to the competition. “Million sales still pay well for investment bankers,” says Andreas Hallin, a top-level expert in the banking hierarchy. The fight for good people has intensified.
Since they cannot reduce salaries, banks try to reduce their costs in other ways. They cut more jobs. Commerzbank plans to cut approximately 6,000 jobs by 2020, and Deutsche Bank will cut a total of 9,000 jobs by the end of 2018.
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And this may not be enough. “A lot of jobs are going to be lost in this industry,” says Ingo Speich, portfolio manager at investment firm Union Investment. “The more stable the salary, the greater the likelihood of retrenchment.”
In a recent interview with the Financial Times, Deutsche Bank Chairman John Cryan hinted that he might take a long-term path: We will hire 97,000 people, Cryan said. “Most major competitors have half that number.”
The only thing stopping Karian from doing this is cost. Deutsche Bank cannot cut too many jobs at once. “If Crean sends all the extras home, he will need new capital,” says a source familiar with the matter.
In fact, it is very expensive for banks to get rid of senior employees. In Germany, labor market rules are not very flexible, says Biermann, a personnel consultant. There are a lot of people in the middle tier of banks that really need to be differentiated. “Why should someone earning €300,000 a year get three annual salaries?” Bierman asks.
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Job creation in banks is likely to continue at a slow pace. One after another. Falling industry salaries are still OK but fear reigns – and many bankers have lost the fun at work.
That mood may lighten somewhat with Brexit, which should at least bring new banking positions to Frankfurt. Staff consultants believe that work should start from the second trimester. But first, the number of new jobs should be very limited. And secondly, only a few experts are in demand, they can choose their positions anyway.
For others, like Banker W, not much has changed. “Brexit is nothing more than a promise,” he says at the pizzeria.
Please note: + Concurrent use of content is limited to one device. We reserve the right to technically prevent multiple uses in the future Are you interested in banks, wealth management and investing? Then a career in investment banking is right for you! In this article, I will give you an overview of this professional field and various areas of responsibility.
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Investment banking is very attractive to many aspiring students. Exciting tasks, high pressure to perform and excellent salary prospects attract the best graduates to leading investment banks every year. However, high school graduates and especially freshers have misconceptions about investment banking. For this reason, in this article you will first get to know all the areas of investment banking.
As the name suggests, private markets are confidential information that is not available to the public. An important part of these markets is debt capital (DCM). It’s about raising finance and external capital with your customers. We distinguish between investment grade financing used for customers with high debt levels and leveraged financing for customers with little or no debt.
Alternatively, you will also work on Capital Markets (ECM) projects. This means you are responsible for advising clients on all stock transactions.
Along with DCM and ECM, there is also a popular area of mergers and acquisitions (M&A) and financial restructuring. In short, M&A is advising on mergers, acquisitions and sales of companies and parts of companies. This area currently has the most vacancies for trainees and young professionals in Frankfurt. Restructuring and Reorganization Specialized consulting focusing on companies in financial difficulty, about to declare bankruptcy or increasing their acquisitions.
Felix Herbert Fricke
Public markets and their investors work with publicly available information. Sales departments and
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