The dust has finally settled on a turbulent final quarter of 2016.
With regards to traditional market risk roles in Q4 this year (market risk managers, market risk analysts) we have definitely not seen an abundance of roles. What with new regulations for example FRTB, and the usual BAU roles we expect to see in things such as stress testing, there has been a scarcity of roles. The implementation date set by BASEL for FRTB being pushed back has not helped the case this year, with banks preferring to focus their hiring elsewhere to prepare for other regulations. However, the complexity and amount of work which is needed to be done to ensure complete adherence to the regulation is definitely going to be a driver going forward into 2017. Risk analysis roles have also been in a shortage in the final quarter of 2017, along with the rest of the year. The roles which we have seen in this space over the year have been analysis of exotic derivatives; the analysis for the more vanilla products beginning to be run through a quantitative model and the report being automated. There is still a need for the investigative minds of a risk analyst on the more exotic products, needing to investigate VaR limit breaches and understand why this has happened. The good thing with FRTB coming up is that both risk managers and risk analysts will have the transferable skills to get involved and add value to the regulation. Banks are going to require a good level of programming skills and good mathematical ability to help with the transition from VaR models across to Expected Shortfall. They will require these people from every asset class, as they’re going to need expertise across these to encompass the capital requirements due to differing liquidity horizons.
We have seen more roles in quantitative finance due to banks wanting to begin the modelling requirements for different regulations across both market and counterparty credit risk. Along with this, there have been some model validation roles for both risk models and pricing models. With regards to quantitative pricing, there have mainly been IPV roles for exotic products. The banks are still looking for people with a strong MSc or PhD in a quantitative discipline (mathematics, financial engineering, financial mathematics, and econometrics) along with good programming skills (R, C++, C#, Matlab, VBA).
The Credit space has been quiet for so long within the banking space. Some of the larger banks have off shored this function to cheaper locations and the others are usually using their direct teams of referrals to fill these positions in some of the larger organisations. We used to get a steady flow of credit roles across large corporate credit and SME as well as NBFI and FI roles. There are some of these positions on the permanent desks but not so much in the contract world. This is surprising as there is usually a back-log of reviews that need the man power to get through to hit dead-lines and assess whether the loans and credit lines are within the organisations risk policy. What we have seen is some smaller non-banking financial institutions looking to take on credit analysts. This includes some organisations that would fall under the category of fin tech. The roles are fairly short term but pay quite well and people are attracted to them because of the non-corporate, relaxed atmosphere and the exciting nature of a start-up and the potential for growth.
This space has been really quiet. Again the volumes have been on the permanent side with XVA and CVA quantitative roles which technically cover pricing, market risk and counterparty credit risk. There hasn’t been any PFE, EPE, EEPE modelling or reporting on the trading book side and there hasn’t been any PD, LGD, EAD modelling on the banking book side. There was some of this earlier in the year for some of the retail banks but during Q4 we didn’t see any roles in this space. We believe that we are going to experience an uptick in recruitment in Q1 2017 however many of the hiring managers have been candid about volumes at this stage even though budgets have been set for a couple of months.
We saw a handful of roles in Q4 for Operational Risk and Internal Audit. Given the emphasis from regulatory bodies that banks continue in making their frameworks more robust, programmes have been established within the banks in order to do this. As awareness of this area is becoming greater, Operational Risk seems to be growing in popularity amongst candidates who are looking for a career change or to broaden their skill sets as they see it as a growing area. In Q1-Q3 we had seen clients looking for 1LOD and 2LOD candidates however nothing within 3LOD. In Q4, we received our first 3LOD role focusing on SOx. The level of job flow has been due to factors such as: Already established teams and therefore the need for extra headcount. Budgets are squeezed, hence no funding. The Basel Committee had introduced the Standardised Measured Approach (SMA) in March 2016 which will replace the current standardised approaches and advanced measurement approach. So as we see a move away from these approaches, we may see some more roles coming out focusing around the improvement of operational risk data as this has been highlighted as key focus by Basel, or perhaps roles which facilitate the change between methodologies.
In Q4 Risk change was left with a feeling of what might have been, undoubtedly it was not the market that many would have hoped to have seen following a relatively quiet year. Some Banks have continued the trend of preferring to hire permanently as opposed to contract hires, and the contract hiring that did occur, was for the most part, at lower rates than what was seen 18 months ago. This can be attributed partly to the drawn out nature of Brexit negotiations fuelling fears that the UK will leave the single market. The resulting decrease in value of the pound and the fact that share prices of Investment Banks have dropped dramatically – has caused a reluctance to hire. However, it has not all been doom and gloom. Risk Change has seen continued hiring in CRD IV, BCBS 239 and Stress Testing. We have also seen the early stages of hiring for major regulatory driven programmes such as FRTB and IFRS 9. In terms of positions in demand, Business Analysts have been the talk of the town. The CRD IV program at a Leading UK bank has looked for a number of Business Analysts at varying levels of seniority. At the more senior end, perhaps the greatest challenge has been to find the right balance between experience in leading a team of Business Analysts, and detailed knowledge across Credit Risk. This same bank has also looked to expand their FDSF programme, bringing in a number of Business Analysts with strong data backgrounds.
Rates here have ranged between £400 - £600 per day. We have also seen a need for Business Analysts across IFRS 9 at a number of banks. Candidates with experience across Banking Book Credit Risk and Stress Scenarios are sought after for these types of roles from a Risk perspective. Rates for these types of positions have ranged between £400 - £600 per day. There were also a number of permanent positions required to work on the largest separation of a UK bank ever. This program has seen a need for Business Analysts with experience working across Target Operating Models and Risk systems. The corporate titles for these roles have been a mixture of AVP and VP. There was not as big a push for recruitment in FRTB as expected in Q4, however one global Investment Bank looked to recruit into their Market Risk department, as they slowly build out a team to implement the regulation. We feel that this is likely to be the start of a high volume of recruiting across a number of different Banks, as the deadline of January 2019 draws closer. Predicted rates at the more senior end are likely to be between £600 - £750 per day. In terms of Project Managers, it is largely across the permanent space where we have seen demand for them. A ‘Big Four’ management consultancy is looking to bring in a number of Project Managers to implement FRTB, at Assistant Manager, Manager and Senior Manager Level.
After a quiet Q2 and 3, Business Architecture has seen a small increase in hiring; we have seen a requirement for CRD IV and BCBS 239. There are signs that this could be an area of growth in hiring in Q1 and Q2 of 2017, with FRTB and IFRS 9 expected to gather pace. We have seen various rates for Architects, ranging from £550 per day at the more junior end, to £800 per day at a more senior level. Despite a number of Investment Banks having hiring freezes in 2016, Investment Management organisations have seen a big increase in hiring. There have been a number of people brought in across Risk and Data, in order to correct, separate and re-organise existing systems and structures of organisations. This is likely to continue throughout 2017. It is clear that there are more active candidates than jobs at the moment, the advice from us when looking for a job would be to consider two factors, firstly, that there has been a big push towards permanent hiring, and secondly, that rates are not what they were this time two years ago. As a general rule, the candidates that have realised this and subsequently adapted, are now the ones that are sitting pretty in jobs.