Category Archives: London Financial Markets

I’ve got a feeling that despite all my gloomy predictions at the end of last year, 2013 is going to be a good year for the City of London. I started to think that things might not be as bad as I had thought they would be when within a few days of being back in the office we started to get some interesting roles being released. Now, 17 days into the year we have about as many live roles now as I did at my busiest period at any point last year.

A healthy number of roles is always a good sign, but IT recruitment tends to be a “bellweather” for how the financial markets are doing, as opposed to an accurate indicator. For instance lots of roles in January could just be a sign that it’s the New Year and companies wanting to test the market to see what the quality is like, rather than actually having a need to hire.

Good news from the States means good news for us

But there has actually been some low level good noise floating about since the summer, I refer mainly the Oil and Gas boom in the USA. Their enthusiastic adoption of “fracking” has revolutionised their national energy landscape, which is going to help their economy recover, leading to surprising stories that the US is now a net exporter of oil and that they expect to export more oil than Saudi by 2020 flying around.

Then last week I read this article in the BBC news Bank of America to pay Fannie Mae billions to settle mortgage claims. Now that Bank of America, Citigroup, JP Morgan and Wells Fargo have settled their dispute with the US Government (Fannie Mae), the toxic debts they acquired in the lead up to 2007 / 08 will have been cleared off their liability books, which will improve their balance sheets at a stroke, meaning that they can now lend more, pay more dividends and be in a stronger position for the banking standards currently being implemented (i.e. Volcker and the rest of Dodd-Frank). Now they don’t have set aside so much capital to meet these liabilities many of the banks can start chalking up bigger profits.

And today the front page of City AM sees JP Morgan announce, alongside Goldman Sachs, that profits are up 12%. And even better news was that Goldman Sachs recorded a 19% rise in total revenues in 2012. As these two top investment bank do well, we should start to see the other banks also starting to do well. And with all the cost cutting the banks have been doing since 2011, they should be in a place where profits can come quite quickly.

Which can only mean good news for Java developers in the City of London and Finance Technology recruiters like myself. Hopefully this recent spate of jobs will be the beginning of a more successful period than recent years!

On an aside I just can’t help but think what a shame it is that whilst the US banks have been able to sort themselves out, the UK still seems to lag behind. How long do we have to wait for our own banks to move on from the quagmire of 2008?

I have been doing a lot of work with junior Java developers recently and as such have spent a lot of time trying to work out what their priorities are when considering a new position. (Note: I would consider a developer “junior” with anywhere up to 4 years experience, probably someone making their first or second career decision. Anything experience beyond that and I think it’s fair to say you can no longer be considered “junior”)

1. Where the company sits compared to other organisations in the Financial Markets
2. What the company culture is like, and whether the colleagues are a team of “nice people”
3. The technical standard of developers at the company
4. What opportunities there are to learn and for career progression
5. What they will be doing on a daily basis
6. What business skills they will learn

Perhaps surprisingly I have found that point 4 (“What opportunities there are to learn and for career progression”) is actually the least mentioned point of importance when initially thinking about making a decision. Normally I find I am bringing this point up and then explaining what each opportunity might lead to in the long run. However once you bring it up it tends to be something they take it on board, but still few junior developers have brought it up on their own. Points 2 and 3 are probably the most commonly cited as being important.

Will things ever be the same again?

In this recession some people continue to do well, some people are just bobbing along as usual and some people are really struggling. In the main this final diagnosis applies very much to IT contractors for the big banks.

Things were starting to look bad at the start of the year when it became clear that certain banks were actively stopping the renewal of large numbers of contractors (HSBC was one of the first in January). Some of this may have been a natural result of the fact that certain banks have 2 year limitation clauses on their contractors’ contracts and a lot of hiring was done in 2010, but with the economy continuing to flatline it begins to look more and more like the banks are making actively trying to reduce their manpower expenditure.

Then in May and June en masse cuts began. Deutsche Bank, RBS, Goldman Sachs, Barclays Capital started putting legions of contractors on notice. Most of these guys are still around, kicking their heels waiting for the next contract.

Are things really that bad?

In some ways yes. The question is, have we seen a paradigm shift away from contracting towards permanent members of staff? In the long term, no. I don’t think so. When the banks are making money having a section of the employee base which is highly skilled and highly mobile is very useful to the banks, and that hasn’t changed. In the short term it’s the steadily increasing level of regulation, increased capital requirements and general global economic melancholy that means that a £600 a day Java developer looks much less attractive than an AVP on a £65k base. And to make things worse for your career contractor most team leads report that many contractors take a box ticking approach to their daily duties and clock off on-time, everytime.

I have to say that things are the worst for developers with Winforms and Swing specialisms. My advice is get down to Skills Matter and upskill with something modern (Flex or HTML5 anybody?) as soon as possible.

What is happening to rates?

For the first 6 months of the year contractors who were getting new contracts managed successfully kept their rates high, perhaps only seceding £50 or so on their rate. Some of which I believe is down to the Government’s restriction on Tier 1 visas. For BAs and PMs my colleagues report rates falling more dramatically to 500 or just below. I expect the new round of contract positions we are expecting (hoping for) later in September to continue that trend of pushing rates down.

I had lunch with an old contact of mine yesterday who used to be a contractor but successfully made the transition to perm 3 years ago. He told me he thought that it was inevitable that, painful as it may be, contractors would have to start to accept lower rates, as he told me “I may eat with a spoon but I do eat”…