City recruitment freeze as bonuses set to fall

by Gill Montia

Story link: City recruitment freeze as bonuses set to fall

Banks in the City are reported to be freezing recruitment in response to the huge writedowns taken in relation to the US sub-prime mortgage crisis.

Barclays Capital, Morgan Stanley, ABN Amro, Bank of America and Citigroup are all apparently cutting back on new appointments.

The posts particularly affected include risk analysts, financial controllers, audit and treasury experts.

In City terms, these are regarded as middle-office jobs, and staff working in these areas are already expected to receive minimal bonuses or no bonuses whatsoever.

The gains that would normally have provided bonuses for these workers are likely to be diverted to senior executives, who need to be retained because of their client relationships.

According to Emma Halls, of recruitment firm Finance Professionals: “Money is being given to those who are deemed to be a priority. People are feeling very nervous in credit and derivatives. I still expect that the big performers will get a lot of money.”

The Centre for Economics & Business Research is forecasting a 16% reduction in the value of City bonuses this year, to £7.4 billion, and firms are expected to pay around, 50% of the bonuses in shares.

UBS, which this week reported further sub-prime losses of $10 billion, is understood to have reduced the cash proportion of its bonuses to a maximum of 30%.