Oh, that topsy-turvy job market! Some would have us believe that despite unemployment hovering around 7.8% nationwide, the news isn’t all bad for the overall job market here in the US. Some claim that the private payroll jobs growth of 168K in December, 171K in November, and 203K in October is a sure sign that the labor market recovery in this cycle looks as real as the recoveries from the 1994 or 2001 recession and that we are well on the way to expansion and not merely a recovery.
Let’s hope so! Closer to home in investment banking, UBS, which has been making news in its own way recently and not at all positively, has suggested that another bank – Macquarie, should exit the underwriting and securities businesses either by dissolution or sale after reporting that the units were responsible for the bank’s lowest reported overall profit in eight years. They at least suggested that Macquarie should reorganize and eliminate its North American, Europe, Middle East and African equities and investment banking business where it is not big enough to compete.
This comes on the heels of layoffs throughout the market towards the end of the year ending in 2012. This search firm has received resumes from professionals of just about every major shop reporting that their new search for employment was as the result of a reduction in staff. Just yesterday, we had one person say “it is known that my bank is in trouble,” when I can assure you that except for the recent re-maneuvering of leadership at the “C” level, it wasn’t really known at all! Add to this the major news of another bank’s recent goal to reduce headcount by ten thousand people by the year 2017, and it should make one wonder if the securities and banking industry is still a viable path for college graduate hopefuls and seasoned professionals to continue to pursue.
We have been seeing the signs of a market consolidation in the last three plus years following the credit crisis. Much of this comes as no surprise to industry veterans. When I entered executive search back in the early eighties I dealt with a large array of firms with names like: Merrill Lynch, Pierce, Fenner & Smith; Shearson Lehman Kuhn Loeb Rhodes (which was acquired by American Express and then later acquired E.F Hutton); and Prudential Bache Halsey Stuart Shields; amongst others. I was told that the market was constantly undergoing a process of expansion and consolidation as free markets do from time to time, and the capital markets were no exception. It may be about to enter a period of acceleration.
At this point, if we are to believe that the financial markets “move in cycles” just like other industries as other more sophisticated clients, mentors and market observers have told me continuously over the years, then this consolidation phase is an important part of the reawakening of Wall Street. If that is so we wish it “God’s Speed” in its process! We can then start talking about how the financial markets are no longer in its recovery phase and well on its way to expansion. Let’s hope for the days to come when the talk of mammoth legal settlements, reduced bonus pools, and takeovers in the industry are finished and that jobs, jobs, jobs will once again be the focus of our attention.