Exodus of talent the "biggest challenge" facing investment banks now

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Investment banks are competing against an ever-growing band of competitors looking to hire the best and brightest graduates and face a stiffer challenge retaining staff once they’re recruited, according to senior bankers in Europe.

When Diego de Giorgi, co-head of corporate and investment banking at Bank of America Merrill Lynch, started in investment banking 25 years’ ago, the top students in Europe with finance-related degrees were “split 50-50 between banking and consulting”, he said. Later, competitors like hedge funds and private equity started poaching the banks’ talent and now the top graduates want to work for Google, other large tech firms and strategy roles in industry, he said. Banks are no longer an automatic choice.

“We are a professional service and 99% of our assets are in our people; we need to do everything we can to attract them and stop the brain haemorrhage of talent,” he said during a panel discussion at the London School of Economics Investment Banking Conference this week. “Investing in the next generation is the most important thing we can do, and it’s the biggest challenge.”

This problem does not just exist at the graduate level. MBAs from top business schools are increasingly choosing to go into technology roles over investment banking, despite the fact that financial services firms continue to offer the highest number of opportunities. Banks are struggling to hire and retain enough junior bankers – pay rises don’t seem to be doing the trick – and are casting the net ever-wider to fill the roles. More senior banker leaving the industry claim that people are exiting at a faster rate than ever.

Investment banks have indulged in a lot of “soul-searching” over the past few years and have put more effort into more training for their young recruits, says Camillo Greco, head of M&A advisory for EMEA at JPMorgan. “There are much more structured training opportunities for young, ambitious students, now more than ever,” he said.

The obvious solution to broaden the appeal of investment banking would be to open it up to a more diverse range of candidates. Currently, investment banks tend to target top-ranked universities and, despite being open to applications from any subject areas, also hire people with finance-related degrees.

De Giorgi says that competition for banking places “cuts across race, nationality and gender” and that this year’s BAML graduate intake in EMEA is 43% female and from a diverse range of nationalities. He admits, however, that the banking industry needs to do more to retain women further up the career ladder.


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