eFinancialCareers

It was a year of two halves for Aussie bankers: the first good, the second bad. But some had it better and worse than others.

2007 was a good year for:

Wealth managers
1 July 2007 marked a radical change in the way Australians plan for retirement. As a result superannuation inflows went through the roof. Recruiter Luke Heath from Chandler Heath, says wealth managers, in particular, made hay. “Private bankers, stockbrokers, financial planners and para-planners have been in demand.”

M&A
Australia’s dealmakers escaped the US credit squeeze relatively unscathed. According to Thomson Financial, fees for M&A activity rose nearly 60% in the first nine months of the year compared to 2006. Meanwhile, KPMG’s head of M&A, Robert Bazzani told WA Business News that the value of Aussie M&As doubled in 2007 and is set to remain strong in 2008 thanks to the participation of trade buyers.

Despite the fertile M&A terrain, Darren Terkel, front office banking consultant at Michael Page International, says plenty of Australian M&A pros remain eager to shift into private equity.

IT developers
The development space saw plenty of demand in 2007. Dudley Levell, director of financial services at IT recruitment specialist Finrecruit, says, “It’s been a great year for Java developers and those on the .Net side. In some cases, the right candidates with financial services experience could earn 20% more than in 2006.”

Traders
Although banks like UBS lost money on their prop trading operations, market volatility created an excellent environment for experienced traders this year. Luke Heath reports, “There has been strong demand for proprietary traders with trading track records, and futures brokers with transferable customer bases.”

And 2007 was a bad year for…

Confidence
The Aussie share market took a 2.9% hit in November, after sub-prime credit issues resurfaced. Although Australia’s largest banks have been relatively unaffected by the credit turmoil so far, there are concerns that the situation may worsen in the New Year. St. George Group, for example, has an AU$350m exposure to Centro Properties Group, whose stock plummeted after it proved unable to renegotiate $4bn in debt.

As a result, many local banks will continue to take a wait-and-see approach to recruitment well into the first quarter of 2008.

Private equity and leveraged finance
As funding for global private equity deals dried up, 2007 failed to live up to expectations. Bids by private equity funds for Orica and Qantas Airways both failed, as did a range of smaller deals involving private equity funds, including the sale of niche pharma group Orphan Australia to AMP Capital Investors, mining services company Runge, also to AMP, and insurance group Stardex to Ironbridge Capital.

Recruiters said private equity funds continued to hire, but that pay was being spread increasingly thinly as the number of juniors increased.

The leveraged finance sector also took a terrible turn for the worse as investors’ appetite for highly leveraged debt diminished. UBS, for example, was unable to sell on $1bn of debt it underwrote for Stella, the travel and leisure arm of MFS in June. And in October, six banks banded together to provide the $2.4bn loan required to finance the bid by US private equity fund Carlyle Group and Australia’s National Hire for Coates Hire – in the past such bids would have been funded by just two banks, according to the Australian Financial Review.

Australia’s private equity recruiters said hiring in the sector collapsed in September.

Working hours
The i-banking talent shortage meant people worked harder and there were never enough hours to go around. Victoria Biggs, a consultant at John Michel, says, “In professional services, where you are in a revenue generating role, it just means that rather than working 16 hours in a day, you work 20.”

Credit
The sub-prime crisis sounded a death knell for fevered activity in the credit markets, particularly when it came to securitization and related collateralised debt obligation (CDO) products.

Fortunately, perhaps, for Aussie bankers, the local CDO market remains tiny, with such products accounting for just 2% of Australian non-government bonds, according to the Reserve Bank. And with Grange Securities facing a lawsuit from Wingecarribee Shire Council on the grounds that it misleadingly promoted CDOs linked to the US sub-prime market, CDOs look unlikely to account for a much higher proportion of the market in future.

Despite this, recruiters insist hiring continues. Darren Terkel, front office banking consultant at Michael Page International, says after the temporary lull, his company is still recruiting for securitization teams.