"RBS Is Going To Go Ahead And Take Those First Year Job Offers Back"

Ouch.... Will this happen at any other banks or just RBS? Anyone personally affected by this?

Also if this is to be expected (as some of you have mentioned) why would anyone accept an offer with them unless it's his/her only hope?

From NYT Dealbook:

“Hearing from incoming summer analysts (now soon to be full-time hires) that their offers were rescinded and they were all given a 10k severance. This is the case for all incoming analysts in IB at RBS.

http://dealbreaker.com/2015/03/rbs-is-going-to-go-ahead-and-take-those-…

 

Depends on what the person's next best option is. It would be rational to accept an RBS IB offer if it was the only IB offer you got.

I know someone who accepted RBS's offer for the IB summer analyst program this summer because it was his only offer, and as soon as he accepted he started mapping out his networking plan for full-time with the knowledge that there probably wouldn't be a place for him full-time.

 

Never. People talk about writing code that will automate things like pitch book creation, but frankly that will never happen. While aspects of it might be mind-numbing, It's not as cookie-cutter as you would think.

 

Very true. But consider the amount of constant communication that will need to occur if the MD/VP is particular on content/formatting. India's guys and girls will need more training, specialization in certain industries, pay, etc. Current analysts are a relatively cheap and safe investment.

>Incoming Ash Ketchum, Pokemon Master >Literally a problem, solve for both X and Y, please and thank you. >Hugh Myron: "Are there any guides on here for getting a top girlfriend? Think banker/lawyer/doctor. I really don't want to go mid-tier"
 

That won't be an issue. With the internet, everyone has access to the same learning material. Big 4 accounting firms and law firms are already outsourcing work there. It's only a matter of time before it crushes IB employment.

 

I think this is highly unlikely for a number of reasons. First, IB makes so much money for the firm that the senior employees are spoiled. Even if the firm could save a few bucks from outsourcing to a low-cost country, the senior people just wouldn't want to bother, and if they're forced they'll pack their shit and go to an EB that provides better services for them. The BBs wouldn't risk having the best talent leave because of this so they would never force it. Second, the majority of the mind-numbing work of a pitch book is already outsourced. No one makes graphs, gathers research, recreate charts/drawings or formats powerpoints. Yes, if it's a fire drill you do, but in that case outsourcing would be too inconvenient anyways. Third, the risk is too high. A lost M&A mandate is potentially worth tens of millions of dollars. No one will want to run that risk because someone halfway across the globe f'ed up.

Though if they find a way to fully outsource pitch books, the world as an IB analyst will be a much better place...

 
Best Response

Oh, the good old India analyst program. I came from the same era of WSO.com (the poster/mod). We actually had India analysts. We were busy enough that my BB hired a bunch of Finance MS/MBAs in India from top schools to provide us with support. The India analysts were from the top of their class at the top schools in India. They were smart, but a lot was lost in translation. There was no way that anyone outside of an analyst would deal with them directly, even though they were actually older and technically more qualified. I personally got way more leverage out of pres tech - does that still exist?

The India analyst was only good for the worst parts of research and very basic formatting and data table construction (just like pres tech). Without anyone to really train them, they were ships without rudders. It wasn't a lack of talent, but a lack of perspective/context that made the program unsuccessful. To what some of the other posters have said, the seniors need someone to look at and yell at.

The worst part was that my BB hired a ton of India analysts and promised that the best could eventually move to the US to restart as part of the proper IB analyst program. I know of 1 guy that actually made it. Due to lack of success, the rest of the program participants in India never got the chance.

IB is very much an apprenticeship industry, and, if there is no one to learn from, you won't learn much.

P.S. I now work in tech. No one that is any good does dev in India. Everything is getting back on-shored these days. There are entire companies dedicated to allowing people to move their tech dev back to the US and away from India/China. Manufacturing isn't far behind. The off-shoring of talent is coming to an end. The best and brightest from the traditional off-shoring countries tend to make it to the US for college anyways so it's not like we're missing out on the talent.

 

Have you ever tried working with teams in India? The cultural differences and other barriers make it easy to get a standard, cookie-cutter report, but it will be difficult for most firms in India to offer any sort of advantage over an analyst in the US. I think outsourcing templates and most of the rudimentary work is realistic, but the final project will likely be created in-country.

Returning to our friends who accepted an RBS offer - fack, that sucks, an early introduction to the cutthroat world of Finance.

 

This is true information, not satire; they cancelled the internship program before earnings came out and just recently rescinded all full-time offers in IB because Mizuho acquired the U.S. loan book so they don't have a need for IB analysts. Mizuho does not have a place for the incoming analysts and are only taking on more senior people from RBS.

 

Banks don't hire hundreds of fresh IB analysts a year just so they can dick around in Excel and fix page numbers on pitchbooks that probably won't see the light of day. They're also interested in finding kids that have the drive/potential to stick with ibanking, are culturally and socially proficient enough to build client relationships and then brings in fat fees when or if they reach MD. You can find just as many intelligent and hard-working college kids in India as you can in the U.S., but the last time I checked you can't outsource closing dinners, getting hammered with clients/senior bankers, and all the other things we call "networking" here.

That sucks for those incoming analysts though. Would have been a lot easier on everyone involved if RBS had made the call a few months earlier.

 

Has there actually been any pressure on Investment Banks to cut their fees? That's the only thing that could lend credence to the outsourcing argument. But from what I can tell, comp for incoming analysts has been going UP and hiring has risen far above the nadir it hit when things tanked.

Most likely what you'll see more often moving ahead are boutiques pulling off the types of deals that Centerview and Lazard did last week with Heinz. Find yourself a billionaire and put it together without the assistance of a BB. That might change the landscape a bit in terms of manpower.

 

If push comes to shove, remaining banks will likely outsource back office and middle office roles before touching FO positions.

In my previous back office internship, I recall that one of the middle-managers was prized for her ability to write codes that automate day-to-day tasks. She was effectively reducing headcount by a fraction every time she succeeded in automating a new process.

But in my FO internship, I rarely came across automation gurus, only speed demons.

>Incoming Ash Ketchum, Pokemon Master >Literally a problem, solve for both X and Y, please and thank you. >Hugh Myron: "Are there any guides on here for getting a top girlfriend? Think banker/lawyer/doctor. I really don't want to go mid-tier"
 

Shame on RBS for preying on college students eager for a career on Wall Street. Nothing is worse than a company that extends a job offer only to rescind it. Personally, I believe that situations like this constitute a breach of contract and (were a case brought to court), the compensation of $10k would likely be found to be inadequate. Unfortunately, no case will ever be brought to court, which means that companies like this will continue lying to potential hires. Also, for all of you that think that this is situation is one-off, it's not. At the college that I'm at, I've heard about this happening to people that were planning to go to work in corporate finance. I won't name the company, but it's a big one.

 

I've worked with "very intelligent" individuals from India who graduated from top universities, have a bunch of respectable certifications such as the CFA, etc. but I had a HORRIBLE experience. A lot of them have book smarts but lack common sense, and surprisingly their work ethic wasn't great. And the timezone issue is problematic because they leave around 10am NY time. The Mumbai workers had crazy commute times and we couldn't get them to stay much later. The best grads from India know how to network and land gigs in the UK or the US.

No reputable bank will outsource IBD to India. To save ~60k per analyst is pocket change when you have adequate deal flow, and would be ludicrous for a BB to do so. Even middle office functions are reviving headcount in the US, or at least moving from India to Singapore.

 

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