A major review by the European Central Bank (ECB) slammed banks for not shifting enough resources to the EU in the wake of Brexit and will ask some to appoint new senior staff, change where they are located or change their group structures. While billions in assets have shifted to the EU since Brexit, the extent of job moves out of the UK has been below expectations.
For more than a year, the ECB has been probing where banks’ resources are based – particularly around trading and risk-management – in what it has called a “desk-mapping exercise”. In a blog post published last month, Andrea Enria, chair of the supervisory board of the ECB, said the review had found 70pc of the desks still implemented ‘back-to-back booking’ models.
Goldman Sachs bolstered its EU operations by 350 staff last year, as major investment banks face increasing pressure to shift staff to the continent following Brexit. The US investment banking giant had 908 employees within Goldman Sachs Europe SE, the entity that houses its continental European business, at the end of 2021, as it continued to roll out its Brexit plans, according to accounts released last month. That was an increase of 63pc on the previous year.
Goldman said the expansion was down to the “continued expansion of the bank’s activities across Europe in 2021 as part of GS Group’s Brexit strategy”. The bank has been bolstering its team of dealmakers on the continent in locations including Spain, Italy and the Nordics as part of a Brexit strategy that involves having senior bankers in different locations across Europe. It has also been hiring traders for its hub in Paris, where it has plans to add another 50 people over the next 18 months.
The bank spent nearly four times as much on compensation in the region last year, with pay costs spiralling from 114m euros to 536m euros. Goldman bolstered salaries and bonuses for its staff globally last year amid an unprecedented deal boom that has forced banks to dig deep in order to retain talent.
The compensation costs in Europe amount to an average payout of 590,000 euros. The bank has also been shifting assets to the continent over the period. At 55.1bn euros at the end of last year, assets within its Europe SE entity were up 32.8bn from a year earlier.
Among the banks involved in the hiring spree more recently is investment bank Jeffries which has hired a senior Barclays dealmaker to bolster its coverage of the consumer and retail sectors in Europe. The US investment bank, which has been expanding its roster of senior bankers in recent times, has hired Gabriel Lambert, who was latterly head of consumer and retail investment banking for Europe, the Middle East and Africa (Emea) at Barclays, according to people familiar with the matter.
Lambert’s hire is part of a broader build-out of Jefferies’ coverage of the consumer and retail sectors, and further recruits for the team are expected, the source added. Jefferies has been building out the senior ranks of its European investment bank as it looks to challenge some of its larger rivals in the region. It has more than 220 managing directors in its Emea business – 80 in investment banking – an increase of 36pc in the past five years.
Most recently, it bolstered its coverage of the business services sector by hiring a senior Morgan Stanley dealmaker and took on Efe Kapanci from HSBC, into a senior role within its leveraged finance unit.
According to Jefferies executives, the bank viewed the consumer sector as an area for expansion this year, and it had plans to hire dealmakers in leveraged finance, France and Middle East. (The writer is our foreign correspondent based in the UK)
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