Following recent stumbles within the global banking sector, not only on the litigation front where banks have paid over a quarter trillion in legal fees and settlements in the past several years, but also due to tumbling profits and more recently, compensation and staffing cuts, many speculated that recent generations of college and MBA grads would pick other career options over Wall Street. They were wrong.
According to the FT, Goldman Sachs attracted more than a quarter of a million applications from students and graduates for jobs this summer, "suggesting fears of a ‘brain drain’ in the sector may be exaggerated as banks introduce more employee-friendly policies." The number of applications from students and graduates globally have risen more than 40% since 2012, the paper adds. This means there is greater demand to get a job at Goldman than there is even in China where recently 1.2 million job candidates applied for 19,000 much-desired govermment positions.
Needless to say, the numbers show Goldman Sachs is attracting far more potential workers and would-be bankers than they could ever employ. It was not immediately clear how many of the 250,000 applicants Goldman - which in recent weeks have been firing bankers for the first time since the crisis - will end up hiring. Goldman's 2016 applicants include 223,849 undergraduates applying for summer jobs and new analyst positions, as well as 30,542 MBAs looking for summer jobs and new associate positions. Undergraduate applications are up 46 per cent from 2012 while those holding MBAs are up 15 per cent.
The trend is mirrored at several other large banks such as JPMorgan, which said it was hiring only 2% or graduate applicants to its investment banking division, and Citigroup, where the proportion of would-be analysts and associates hired in its global investment banking division was 2.7% . JPMorgan said it got 40% more graduate applications for investment banking this year than in 2014, but would not give an absolute figure. Morgan Stanley said its North American investment banking division was now attracting about 8,000 applications a year, up from “6,000 plus” in 2006-07. Those candidates are competing for slightly more than 100 spots, the same number as in 2006-07.
Elsewhere, Bank of America Merrill Lynch said it only offered jobs to 3% of its investment banking applicants — and that 90 per cent of those offered jobs accept them. Even chronic criminal recidivist Deutsche Bank said its investment bank had a 14% increase in intern applications across the globe this year, and hired 9 per cent more interns than a year ago.
Other banks also say they are seeing higher application levels and improved retention rates despite the battering the industry’s reputation has taken for everything from long hours to causing a crisis that inflicted poverty on a generation. In fact, the worse the global banking industry appears to be, the more job applicants it seems to get.
“The idea that suddenly people don’t want to go into banking — or if they do go into banking that they stay for a bit and leave immediately — a lot of that has been exaggerated,” said Sam Dean, Barclays’ co-head of Emea banking who has special responsibility for talent.
Ironically, the higher number of applications partly reflects the fact that there are fewer investment banks now, after the collapse of Bear Stearns and Lehman Brothers during the financial crisis: after the next crisis which may see only Goldman left standing, the bank may have a right of first refusal on every qualified job candidate, and certainly those who can fudge non-GAAP EPS and "adjust EBITDA."
Recruitment companies also said investment banking was rebounding as a desirable profession partly because of banks’ concerted effort to end their workaholic culture, such as introducing more balanced work-life structures. Last week UBS, Credit Suisse and Morgan Stanley said they had introduced more employee-friendly measures, including hours off for personal matters, free Friday nights and sabbaticals.
“They are trying to replicate the Google model,” said Bernie Toole, who heads the investment banking unit at recruitment group Selby Jennings. “Before they used to churn analysts, now they are trying to attract and retain them by introducing a more positive culture, with perks and more flexible working practises.”
Goldman said it does not have comparable application figures for before the financial crisis and will not provide figures for how many jobs are on offer to graduates and interns, saying only that it hired 9,700 at all levels last year. Assuming all 9,700 spots are filled with outside job applicants, that would mean Goldman has an acceptance ratio of 3.9%, well below that of Harvard or any of the world's most famous universities.