Is the ax finally getting dull?

A survey showing that relatively few financial services companies are planning significant layoffs in the second quarter could indicate a slowdown in the industry's relentless downsizing, recruiters and analysts said.

About 74% of financial services providers expect their ranks to remain static next quarter, according to a poll of global banks, insurance companies, investment firms, credit agencies and other finance firms conducted this quarter by the Milwaukee research firm Manpower Inc. and scheduled for release today.

"It's a very high number," said Jonas Prising, the president of Manpower's North American operations. "Employers have cut hard and deep, and if at all possible, they want to maintain their work forces."

The survey of 73,000 companies was hardly a picture of health. It found that the finance sector's net employment outlook — the difference between the number of companies planning to hire and those expecting layoffs — fell to 2%. The gap was 5% in the first quarter and last hit 2% in the deep recession of 1982, Prising said. During healthy economic periods, it hovers at 18% to 20%.

About 12% of respondents expect to hire in the quarter, and just 10% expect staff reductions.

The second-quarter outlook may signal that layoffs are bottoming out, Prising said. "That could indicate to us that some stability might not be around the corner, but, at least, within some imaginable sight."

Leonida R. Pepe, principal with the Mahwah, N.J., executive search firm Butterfass, Pepe & MacCallan Inc., said that there are still likely cuts to come as financial institutions work to lower costs and integrate acquisitions.

For instance, M&T Bank Corp. said last week that it would lay off about 29% of the workers at Provident Bankshares Corp. after the deal for the Baltimore company closes in the spring. Last month JPMorgan Chase & Co. said it would lay off 30% more people than initially planned as it integrates Washington Mutual Inc.

Even though there could be deep reductions ahead, the hope is that they will not be as deep as last year's, Pepe said.

Most of the layoffs that have occurred in the financial services sector were finished in December, Pepe said. "Whatever layoffs they had to make are done."

She said some of her clients are actually poised to add talent in the second quarter in areas like asset management and fixed income.

Corporate and municipal bond experts will be in demand, Pepe said, because pensions and other institutional investors have moved their money from the stock market into the relatively more stable bond market. Fixed-income portfolio managers and analysts will be needed, because that migration of capital is not expected to reverse anytime soon, she said.

Robert Voth, a partner with the financial services practice at the executive search firm CTPartners, said some banking companies have bolstered their ranks as it has become easier to recruit senior executives. "Overall compensation packages needed to attract talent are now much more affordable."

Executives at investment boutiques like KBW Inc.'s Keefe, Bruyette & Woods Inc. and Sandler O'Neill & Partners LP told American Banker late last month that they were adding to their financial services advisory practices. They said they want to take advantage of the talent hitting the market as a result of purges at big financial houses. They also want to be ready for a potential wave of capital-raising and mergers in the banking industry in coming years.

"We've got a unique opportunity right now with all the turmoil in the street and people downsizing," said Bill Hickey, principal and co-head of investment banking at Sandler. "We expect there will be some great athletes hitting the street. We're looking to selectively add to our team."

John Benson, the chief executive and founder of, an online recruiting unit of Dice Holdings Inc., said there has been a surge in demand for wealth management executives.

So far this year wealth management and private banking job ads on his site — which lists about 6,000 finance jobs around the world — have risen 116% from the same period last year, he said.

"There is always a demand for someone who has got good private client relationships — who has a book of business of good investible funds," he said. "That is good, regular fee income."

Pepe said financial firms are recruiting brokers to replace assets they have lost in the credit crisis.

For instance, Boston Private Financial Holdings Inc.'s Gibralter Private Bank and Trust told American Banker last week that it was recruiting advisers on the East Coast to recoup an 18.2% decline in assets last year.

Some companies may be selectively hiring, Benson said, but there could still be more pain ahead. "A lot of the bankers I've spoken too wouldn't be surprised if there was an additional round of layoffs in quarter 2," he said. "If banks continue to post very large losses, they're going to continue to restructure their businesses."

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