U.S. banks, which have cut thousands of jobs during the two-year-old financial crisis, are suddenly racing to fill empty seats to make the most of soaring stock markets and narrowing credit spreads.
Banks, including those seen as least hurt by the crisis such as Goldman Sachs Group (GS.N) and JPMorgan Chase & Co (JPM.N), were cautious when it came to hiring early in the year as they adjusted to the recession and a regulatory crackdown, including compensation restrictions that came with taking government funds in the fall.
Back in March and April, no one really knew if the investment banking business was going to exist again, said David McCormack, managing director at search firm Sheffield Haworth in New York. The world has changed dramatically in the last four to five months and now banks are hiring.
Since most banks repaid government funds in June, there has been a rush to fill gaps in businesses that have performed well over the first half of the year. Equities, fixed income and commodities are areas that have been in particular demand, McCormack said.
JPMorgan and Goldman Sachs reported second-quarter results boosted by trading gains, while Bank of America Corp's investment bank reported a second-quarter profit that helped offset losses on credit cards and other consumer businesses.
Bank of America (BAC.N), the largest U.S. bank, has yet to return $45 billion in government money and has trimmed headcount and had a wave of top management departures since it bought Merrill Lynch & Co on January 1.
But it, too, has lately snapped up senior officials to join its investment bank.
Sanaz Zaimi from Goldman Sachs, will join Bank of America's London office early next year in a senior investment banking role. She secured a multimillion-dollar, guaranteed pay deal, according to press reports.
Last month, Bank of America hired A.J. Murphy, from JPMorgan, as head of Americas leveraged loan capital markets.
In June, the Charlotte, North Carolina-based bank hired Alan Murray, from Citigroup, as a managing director in energy corporate and investment banking.
Citigroup (C.N), which also owes the government $45 billion, has hired as many as 10 managing directors for its U.S. investment bank this year.
Morgan Stanley hired Alex Ehrlich, from UBS (UBSN.VX), as global head of prime brokerage in May, and last month, the New York bank hired Jack DiMaio, previously a fixed income head at Credit Suisse Group (CSGN.VX), as global head of interest rate, credit and currency trading.
The larger U.S. firms, which received billions through the U.S. government's Troubled Asset Relief Program, are now trying to catch up with hiring earlier this year by smaller banks that did not take government funds and by foreign banks that also had no compensation restrictions.
The smaller firms, such as Jefferies Group (JEF.N), and the foreign companies, including the brokerage Nomura Holdings (8604.T), poached aggressively from major Wall Street banks to build up equity sales and trading and other businesses in the first quarter.
Jefferies Group hired a handful of staff from Merrill Lynch at the start of the year. Among other hires, Nomura added a group of equity salesmen and traders from Bank of America.
New York's financial industry has lost nearly 30,000 jobs as a result of the downturn but evidence is mounting that (the) region will be spared the worst, the office of the New York City Comptroller said last month.
Still, writedowns and credit losses have left most financial firms cautious when it comes to hiring, and indeed when it comes to expenses in general. Headcount is unlikely to return even to 2007 levels this year, headhunters say.
There is also a bias toward hiring people from other banks that survived the crisis rather than hiring those who lost jobs in the last two years, even if that means matching stock payouts or offering guaranteed bonuses, headhunters say.
This is not a wave of hiring, this is very selective, said one official at a firm that has hired a handful of senior staff for its investment bank this year.
Experienced senior managers are in particular demand, according to Michael Karp, chief executive of the Options Group recruitment firm. Banks are looking to make senior management teams stronger, Karp said.
While the banks may still be picky, the shift to adding staff rather than making further cuts is a sign that they believe financial markets are turning around, headhunters say.
The feeling is that the momentum is hopefully going to remain into next year, said Karp.