Why Americans don't want to work for European banks on Wall Street
What is it about European banks in the U.S that puts off potential employees? Maybe it's the fact that they're under more onerous pay restrictions than their state-side rivals, or because banks like UBS and Royal Bank of Scotland rapidly expanded and then cut heads. Or simply that they struggle to compete with local investment banks.
Either way, financial services professionals in the U.S favour American investment banks. In the eFinancialCareers 2016 ‘Ideal Employer’ Global Bank Top 20 and the U.S. Bank Top 10 Goldman Sachs, J.P. Morgan and Morgan Stanley were highest ranks. However, while European banks proliferate in the global rankings, just one - Deutsche Bank in 10th - scraped into the top spots.
Do European banks have a perception problem in America? At the very least, our survey results indicate that as potential employers they are not as sought-after among financial services candidates in the U.S. as they are in Europe and Asia.
"The salaries [in the U.S.] are all more or less the same at European investment banks, but some have not produced bonus numbers that are as large as at U.S. IBDs," said Mike Brothers, managing consultant in the investment banking practice at Michael Page.
European banks that placed lower on the U.S. Bank list than the Global Bank ranking
Barclays finished 10th in the Global Bank list but did not crack the U.S. Bank Top 10. CEO Jes Staley has ambitions to make inroads in America and has promised to hire more New York-based investment bankers to give a boost to its U.S. IBD.
Barclays, Credit Suisse and Deutsche Bank have all severely reduced or sold their U.S. wealth management divisions.
UBS and Royal Bank of Scotland both opened huge trading floors in Connecticut at the height of the crisis and have been rapidly retrenching since. RBS, which has reduced its work force in Connecticut from 2,400 to less than a thousand, while UBS also cut its employees from 4,400 before the financial crisis to 2,000 last year, and many predict that more cuts are on the way.
European banks are certainly perceived as weaker than U.S. rivals in key areas. Deutsche Bank, the top-ranked European bank, is perceived as being a poor payer - just 57% of those who said they wanted to work there in the U.S. expect a competitive salary. At Goldman Sachs, this figure was 84%.
Similarly, HSBC finished sixth in the Global Bank ranking, just behind Citibank but ahead of Bank of America Merrill Lynch and Wells Fargo, but 10th in the U.S. Bank ranking, behind those American competitors.
HSBC’s perceived strengths among U.S. survey respondents include competitive compensation (71%), attractive benefits (76%) and challenging/interesting work (76%). However, a smaller percentage of respondents listed the following as strengths: manageable working hours (47%), flexible working options (41%), innovator in the industry (47%) and progressive on issues like diversity, CSR (41%).
Credit Suisse ranked 10th globally, but 15th in the U.S. Last month, Credit Suisse announced that Nathan Romano, who helped to spearhead its strategy to increase collaboration between its IBD and and private-banking arms, was leaving as the Swiss bank backs off from managing U.S. high-net-worth clients' money.
These results aren’t the end of the world by any means – UBS, Credit Suisse and HSBC all made the U.S. Bank Top 10 list – but it does show that their level of prestige in the U.S. doesn’t match what they’ve achieved in Europe or Asia.
"People are willing to make a move from banks that are unstable, such as Barclays, Deutsche Bank and Credit Suisse," says Oliver Hayes, the head of corporate and investment banking, Americas, at Selby Jennings, a recruitment firm. "The 2X bonus cap [that some European banks are bound by] is a big factor that comes into play."
If a bank had large losses in different areas, it will still have an impact on investment bankers' bonuses.
"I wouldn’t say that the investment banking division at some of the European banks had a bad year [in 2015], and equities did OK too, but fixed income, currency and commodities (FICC) had an awful year, which will impact other areas of the banks," Hayes said. "Many [European banks] are looking to cut staff in the U.S.
"They don’t need to have a lot of people in the seats, based on the year they had performance-wise," he said. "If I were an IBD candidate weighing competing offers, I probably would steer clear [of European banks], since Credit Suisse and Barclays are not a very stable environment, and they're not giving great bonuses this year."
Most U.S. investment banks have not retreated from any business areas altogether, whereas European banks have been restructuring and pulling out of some lines of business entirely. That has likely impacted their respective reputations on the street.
The bank that made the biggest leap up the rankings when going from the worldwide results to the American list is Wells Fargo, which ranks 14th in the Global Bank Top 20 compared to seventh in the U.S. Bank Top 10.
Similarly, Bank of America Merrill Lynch moved up from eighth globally to fourth in the American ranking.
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