Insights

Credit & Risk Management

CREDIT & RISK MANAGEMENT MARKET COMMENTARY, Q2 2017

• Article by BRUIN Financial

CREDIT & RISK MANAGEMENT MARKET COMMENTARY, Q2 2017

MARKET OVERVIEW

One of the most common questions consultants on the Credit and Risk Management desk at BRUIN Financial get asked in meetings, with both candidates and clients alike, is “how’s the market?” Traditionally, answers to this question would be polarised between “manically busy” in Q1, the first half of Q2 and the end of Q3; and “very quiet” in the second half of Q2, the beginning of Q3 and the majority of Q4. In recent years however, hiring appetites in the Risk space have stabilised, and we find ourselves in the position of being uniformly busy all year round! Q2 saw a high level of hiring activity across both buy and sell side firms all the way through, and as the summer holiday period enters full swing firms will be keen to wrap up legacy Q2 hires in the coming weeks.

Role Profiles

Market Risk

In contrast with a relatively slow Q1, Market Risk was a hive of activity across banking in Q2. Roles at Group level were abundant, and candidates with experience representing Market Risk functions to senior internal stakeholders in other business areas and global regulatory bodies were in high demand. Rates experience commanded similar attention from firms on the Sell Side, and towards the end of the quarter we started to have benchmarking conversations with firms for roles at the senior end of the market. Whether these roles will come out externally in Q3 remains to be seen, but if they do it could trigger a wave of activity in the Market Risk space.

Investment Risk

Investment Risk proved to be similarly busy, with roles across varying asset classes and seniority levels coming to market. Senior candidates in this space, who had experienced somewhat of a drought in the past couple of quarters, suddenly found an invigorating shower of roles to whet their appetites. Naturally this has led to fierce competition at the senior end of the candidate market in Investment Risk. In contrast, there is a smaller pool in quality of candidates at the mid level, as there is little motivation for candidates at this level to move. We have seen that larger firms are bulking out FLOD functions that require same skillset as SLOD functions but these roles are more appealing as closer to the FO. The roles in this space are more strategic and are seen as less of a policing function. Firms are continuing to look for more technical/quantitative background. Programming languages like Python is an increasingly desirable skillset.

Quantitative Analytics

Towards the end of the quarter, BRUIN Financial’s Quantitative Analytics consultant Tim Holbrough attended a PRMIA event on the function of Model Governance and its growing necessity from a regulatory perspective. Model Validation and Governance have historically been areas of high demand from our Investment Banking and Consultancy clients, due to them requiring the rare, and highly valuable, technical and stakeholder management skillset combination. It was noticeable that a number of Asset Managers and Hedge Funds were represented at the event. One key point of discussion from the panel, made up of Senior Model Risk professionals from Deutsche Bank, Credit Suisse and the PRA among others, was the potential advent of heightened regulation on the Buy Side. In the opinion of this commentary, there is likely to be a significant increase in demand from Funds for top Model Risk banking talent in the coming months, given the likely advent of heightened regulatory scrutiny of these firms.

Operational Risk

Operational Risk on the Buy Side has seen a lot going on at junior to mid level. One of the challenges we face recruiting in this area is that buy firms will only consider candidates with prior Asset Management experience; and many are keen from candidates who’ve worked in the business and therefore also understand full trade life cycle.

Strong candidates at the right level are hard to come by, and firms seem reticent to flex on their ideal requirements. We are actively encouraging firms to hire junior talent who can learn quickly and have the right attitude as opposed to looking for someone ticking all the boxes – often it will take longer to find the finished article than it does to train someone!

By contrast the Sell Side saw an abundance of activity at VP level, particularly in the 2nd line of defence pertaining to framework development and ICAAP processes. The quarter saw a high level of activity in Information Security hiring across Financial Services in general, and hiring managers have often been keen to see candidates from outside Financial Services with the aim of adapting best practice to the sector.

Credit Risk

Credit Research hiring patterns in Q2 showed a continued demand for candidates with High Yield and Distressed Debt research. In a noteworthy show of post-Brexit positivity, funds are looking to organically grow their teams here in London. In traditional long only shops, IG roles have become more apparent on the market. Seen as ‘less sexy’ than High Yield, positions have been more prevalent at the junior end of the market. In addition, the Sell Side started to see an increased level of hiring activity in Credit Research in Q2. Firms have begun to show their hands on price of research, but with MIFID II kicking in at the start of next year their futures are continuing to look uncertain. BRUIN Financial’s Credit Research consultant Simeon Randell ran an exceptionally successful Breakfast Seminar on ‘ESG Analysis in Credit Markets’ at the start of June, with over 25 senior research professionals engaging in a vibrant and thought-provoking discussion on advances in this space.

Quantitative Research

Quantitative Research continues to be an area of fierce competition on the buy-side both from a candidate and client perspective. Systematic and Global Macro Strategy Hedge Funds are always looking to amortise existing functions with the finest talent on the market, and are seen as the greener grass on the other side for Front Office Quants in investment banks who are having their more creative strategies crushed by regulation.

Women In Risk

Towards the end of Q2, BRUIN Financial partnered with Women Ahead’s 30% Club to run a breakfast seminar discussing the offering of cross-sector, cross-industry mentoring to women across every layer of the career pyramid. A large part of what we are seeing as recruiters is that it is not just about hiring strategies and talent pipelining, but actually retaining key talent that is most important. We feel that mentoring is a huge part of this, and is crucial to ensuring that talent is not lost from organisations at crucial moments. Over the course of the next quarter we will be investigating how this can be specifically tailored towards women in risk.

We’d also like to take the opportunity to welcome our new consultant Arjaree Shackleton to the team. Arjaree holds a Bachelor degree in Sociology from Ritsumeikan Asia Pacific University in Japan and has over 6 years of recruitment experience. Prior to joining BRUIN, Arjaree was recruiting in Tokyo in both Financial Services and Commerce & Industry. Arjaree began her career in a subsidiary business of MUFG in Tokyo in Overseas Business Development department. Arjaree recently moved to UK and joined BRUIN as an AVP on the Credit & Risk Management desk and focusing on Credit, Operational and Technology Risk areas.