I am sure this has already been discussed however I could not find anything searching.
Anyway, my question is: How likely is it for someone to lose their job as an investment banker if a recession hits? And if you do lose your job what do you go to until you can get back into investment banking?
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Many recent/new grads have really benefitted from the hot hiring market, but I think banks are being smarter about this current cycle. You're not seeing the runaway hiring that happened during the dot-com. 5-6 years ago, opportunities were definately scarce after the banks made wholesale cuts to staff due to overhiring. Many of my peers lost their jobs during the last cycle and had a hell of a time trying to find work.
One of the smarter guys I knew sensed we were near the "top" and opted to join the restructuring practice of a bank. He did pretty well for himself when sh!t hit the fan.
I recently talked to him about the restructuring business, and he said while things have been slow many banks are starting to ramp up their restructuring practices in anticipation of the next credit/business cycle. We'll see if he's right but it's not a coincidence banks and funds are raising money money and ramping restructuring business.
With all that said, it probably wouldn't be a bad idea to join the restructuring group of a bank.
If we're heading into a recession... (Originally Posted: 09/25/2007)
Lets look at this objectively. Financial markets had been booming until the credit crunch hit and now we're all worried. Perhaps that's just the cyclical nature of the business and we're in for a recession. Global markets could use a correction to set the economy in balance, as much of the spending as of late has been dependent on consumer expenditures.
So, assuming that this is where we're heading, a key question for a number of readers on this forum is, what happens to jobs? BBC recently posted an article that global IBanks are set to lose $30B this coming year, mostly from write-offs on loans.
Ibanking appears cyclical in nature, so if jobs are getting hit, new graduates should be looking elsewhere for jobs, perhaps with corporations. For undergraduate B-school students, this means giving new consideration to a publio accounting designation as well. What happens to consulting jobs?
A penny for your thoughts?
Consulting will be the first thing to go in a recession, closely followed by investment banking (although area specific). Accounting will be more insulated but will still be hit.
Corporate functions that are equivalent to this will be safer than all of them.
and what's the "if" for in your subject title?
Consulting is kinda iffy, it's also slightly counter-cyclical. (Somebody has to be the Bobs.) Heard from that consulting still gets cost-reduction engagements in a downturn, but wouldn't want to be a newbie in consulting over next 2-3 years.
I actually think accounting would be the same or better, cause you really can't eliminate alot of the auditing and tax work, and it's cheaper to hire new blood to do grunt work than to retain slightly senior analyst level accountants.
It depends on what type of consulting. In a recession all non-essential "luxury cap-EX" budget requests get slashed brutally and that includes strategy consulting, and technology investments..which can all wait.
Trust me, if management is fighting to stay alive, he just doesn't have the resources to keep paying for indefinite studies, which he must eventually implement anyway. He MUST act now utilizing the talents in his current, and hopefully experienced management team.
In the heat of the moment, current management MUST fix the situation, or they get fired. Management rarely hires more expensive consultants, especially in a down-turn.
If it's anyone hiring them, it's the board, and not necessarily for improvement, but to make a credible case as to the extent that the current management has things screwed up, and why a change is needed..Bottom-line: Tell us why current management should be fired.
That's why the consultants stay small, to avoid huge cuts in a down-turn.
But restructuring or debt-work out firms such as Alix partners, Alvarez & Marsal, FTI, HLHZ, Big4 restructuring, and IB restructuring will certainly add value in a slow-down, especially in the recap space to help with internal liquidity, and working capital needs, that are hard to come by in a downturn. These groups are typically very small, with finance and legal folks to manage the bankruptcy process.
Big4 would do well in all seasons as long as stringent Sarb-Ox mandates remain.
I'm not bashing consulting, just stating how things really are in the board room.
When do you think the financial markets will turn around and get better?
Also, what groups within IB would be the least affected (other restructuring)?
Effect of a Recession on IBanks Hiring Analysts (Originally Posted: 04/11/2007)
What are the effects of a recession on IBanks hiring of analysts?This is probably highly variable based on the level of the recession and where the greatest impacts are in the economy, but I was wondering what the general impact on hiring is for most Ibanks. Thanks.
It would obviously mean a reduction in hiring or a freeze.
if you guys are talking about jobs cuts at investment banks, would you guys foresee job strength and extra recruitment in investment banks specializing in restructuring?
and is the hypothetical freeze in hiring (or if cuts are made) group-specific, or would it be bank-wide?
I could definitely see how some groups could still be doing lots of business even in a recession.
Thanks for the replies. I realized that it would result in a slow down in hiring, I was just wondering how drastic that slow down would be.
could be very dramatic...the hiring picture for the class of '02 and '03 was awful.
well you guys should hope that the economy continues to be robust (from a market and banking perspective)
that's why you save your money
Probability of Recession, Reduction in FT Offers? (Originally Posted: 01/21/2008)
I secured an internship with a BB this summer. I am concerned where the economy is heading in the next couple of months. What is your take on this? Will there be a significant reduction in FT offers given the current market situation?
I wouldn't be worried about a lower % of FT offers being extended to summer analysts. In fact, I'd say that banks will now be giving out a higher percentage of FT offers to summer analysts, and doing far less outside FT recruiting (already being done). ppl should be more worried about the number of SA offers being extended. Granted, this is all assuming things don't get too much worse, as all bets are off.
If things don't improve it will be more of what we saw this year. Banks are going to hire less, and will look to eliminate any risk of hiring a non-worthy analyst. As a result, they will pull mostly from the kids they know best (the summer interns), and then take few chances on the rest of the pack. So..if you get a SA spot, you are in good shape.
Firstly, it's "fewer," not "less." Secondly, if we omniscient posters on WSO could divine the direction in which the economy is headed, then our lives would be significantly breezier.
You're an idiot.
Bobcat09, We dont need your stupid comments in this forum. We pretty much have a general understanding of the direction of the economy. In fact there will be a significant reduction in M&A deals and other activities that generate revenue to Investment banks. So you have not done anything to answer the question, maybe the fact that you haven't secured anything for the summer and that you suck at life represents the attitude you have towards the forum
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They say money can't buy happiness? Look at the fucking smile on my face. Ear to ear, baby.
Couple kids I knew from Wharton last year had their FT offer rescinded after the contract was signed. They received 60K comp.
My intuition is that banks will continue to give out full time offers as they see fit and deserving. Nothing you can do about the overall economy. Just work hard during your summer and don't give them a reason not to extend you an offer at the end. Which is what you'd be doing anyway, right?
I appreciate all of your answers, we can see the difference between really mature and experienced people and foolish tool's
They say money can't buy happiness? Look at the fucking smile on my face. Ear to ear, baby.
.
I agree with nystateofmind - on a % basis, more FT offers will be given to SAs than to outside candidates.
As the economy continues to slow, which is more likely:
1) FT offers being rescineded, or
2) The firing of first or second year analysts
*rescinded
how is this market crash going to affect current IBD/S&T interns at BBs? (Originally Posted: 08/11/2011)
with the current SAs - analyst specifically- about to end their gigs at BBs in 2 or 3 weeks max, any ideas on whether this market crash will impact their chances of getting a FT offer?
my own judegement says it might not, since its hard to really decipher if we are heading into a recession, and 3 weeks is too quick to make judegements about markets, and change your hiring plans consequently.would love to get a diff view though
for what it's worth I pretty much agree with your assessment, but as a current SA maybe I'm just being optimistic
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