Negotiators have a new reason to come into the office: to avoid job cuts.
Bank executives continue to preach the benefits of hybrid working, but negotiators say they face pressure to return to the office, or hit the road, as companies prepare for a new wave of layoffs amid of the drop in income.
“When everyone was locked up and working remotely, we were all the same. Now that there’s an option to travel and be in the office, competitively, we’re going to find out which one is better,” said Bob Diamond, former head of Barclays who now is CEO of the private equity firm Atlas Mara.
“In the first big downturn, if a large organization has to cut their workforce, who are they cutting? The remote people or the office people? It will be an interesting test.”
This time last year, banks were raising salaries, offering guaranteed bonuses and counter-offers to departing employees. That’s when bids soared, with the 2021 rate hike rising to a record $130 billion, according to data provider Dealogic.
But banks are notoriously quick to cut jobs when income is down, and fees have fallen 38% globally this year, with $24bn written off compared to the first six months of 2021.
A 74% drop in capital markets fees, to $2.6 billion, puts jobs in these divisions particularly at risk. Berenberg has already cut 50 jobs in New York, Financial News has reported, while UBS has cut ECM bankers and Credit Suisse has eliminated some positions as part of a broader cost-cutting program. Hiring has slowed across the board, with headhunters suggesting some City banks have begun de facto hiring freezes until activity picks up.
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“It’s important to perform, but it’s probably just as important to be seen,” said one mid-ranking banker. “If your boss is in the office, it’s a good idea to be there too.”
“Banks are very likely to make cuts at the end of the year as revenues have fallen,” said Stephane Rambosson, co-founder of executive search firm Vici Partners. “The question is more about the scale and timing of these than anything else. Spending more time in client meetings or in the office than your peers could make a crucial difference in certain cases.”
Face time, a term often used in banking to describe long hours at the office, even when there is no work, is back, according to conversations with seven senior bankers. Even in organizations that have formal hybrid work programs, business makers show up most days when they’re not traveling for business.
Adrian Crawford, a partner in the employment practice of lawyers Kingsley Napley who focuses on financial services firms, said investment banks often use “hidden criteria” when making decisions about bonuses and redundancies.
“In an industry where bankers are expected to work long hours for this, being in the office and being seen, rather than being at home and being forgotten could be a big problem as banks start to cut back” , he said.
At Bank of America, Goldman Sachs, Citi and Barclays, among others, a five-day office week with some flexibility is the norm for bankers, negotiators told FN. Most of JPMorgan’s traders meet four days a week, and more senior staff are coming in every day, experts say.
About 60 percent of JPMorgan’s London-based staff are in the office on peak days, according to a person familiar with the matter, while the ratio is also higher than 60 percent at Goldman Sachs’ headquarters in United Kingdom at Plumtree Court. Both banks are tracking employee attendance using ID cards, the people said.
“Now it’s basically back to pre-pandemic life,” said a senior trader at a U.S. investment bank. “We’re in the office when we’re not traveling. That’s tough, but preferable to 12 hours of continuous Zoom calls.”
“The routine is four days at headquarters and maybe a day in meetings, usually around Mayfair,” said another managing director of a UK investment bank.
In November, Deutsche Bank’s UK and Ireland chief executive, Tiina Lee, told a conference that 98% of its employees had hybrid jobs, but that excluded the investment bank. Credit Suisse chief Thomas Gottstein told Bloomberg in May that a full-time return to the office was “unrealistic,” but three senior negotiators at the bank contacted by FN said most people were in the office when not traveling on business.
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Some bank chiefs have made no secret of their need to return to the office. Jamie Dimon, chief executive of JPMorgan, said in 2021 that working from home doesn’t work as much for “younger people” as for “those who want to rush,” while Goldman boss David Solomon said that remote work was an “aberration we’re going to do”. correct as soon as possible”.
More recently, Jefferies encouraged its top traders to return to the office, as “many of our mid-level and junior colleagues feel justifiably left out.” Rich Handler, the bank’s chief executive, said in an Instagram post in June that bankers should use remote work in a “limited way.”
“If you want a career, join the rest of us in the office and use WFH only when it’s smart,” he wrote.
Senior bankers consistently cited the need to encourage junior bankers to return to the office to train them for a role where learning on the job is critical. Analysts and associates in London told FN that they are now expected to come in most days.
“What’s changed is that we can leave the office, go out to dinner or go to the gym and then log back in from home. It’s a certain level of flexibility – before we were only expected to stay until 2-3 in the morning if there was any work, which didn’t make any sense,” said a young man at a US bank.
To contact the author of this story with comments or news, please email Paul Clarke