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London’s bankers put job hunts on hold as Brexit vote looms

The fear that Britain might quit the European Union (EU) has put hiring in the financial services sector on hold in London's financial center.

Across the City, employees have decided to stay put as uncertainty around the referendum brings hiring to a halt - in spite of a general trend for abysmal bonus packages this year.

Recruitment consultant Joseph Leung told CNBC that both the middle and back office departments have been affected the most as the challenge to hire for these roles is not as great in other countries.

'Horrible first quarter'

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"I think it's been a combination of a horrible first quarter and the looming referendum that's contributed to somewhat muted hiring start to the year. That said, Q2 is shaping up to being much better, so let's see how this will play out," said Joseph Leung, Managing Director at Aubreck Leung.

While adding that the banking industry has already been hit by regulatory changes and higher costs of capital, Leung adds that if a Brexit happens then it will open a whole "new can of worms" and challenges.

London is home to 729,600 financial services professionals, a number that is 14.7 percent above the low seen in 2010, according to a survey conducted in October last year by industry body TheCityUK. Across the UK, this numbers jumps to 2.2 million employed in financial and related professional services. Furthermore, around 35 percent of EU wholesale financial services activity takes place in London and over 126 companies from other EU member states are listed on the London Stock Exchange (LSE).

Analysts have warned that if these companies were to consider moving in the event of a Leave vote, or relocate some of their staff or business, the potential impact on the U.K. economy could be huge. This could lead to reducing domestic employment and tax receipts. But for now, the uncertainty too seems to be having a major impact on hiring and remuneration.

"The uncertainty surrounding the EU referendum has already led to delayed investment decisions and hiring plans, with many firms waiting for the outcome of the vote on 23 June," said Chris Cummings, Chief Executive of TheCityUK.

He explained that in the event of a Brexit, many financial services firms that are already based in the UK to gain access to the EU Single Market and its 500 million customers may consider relocating operations and jobs to other centres across the EU to "enable continued and unfettered access."

A number of banks have warned their employees of job cuts if Brexit happened. Recently JPMorgan chief Jamie Dimon said the bank may cut up to 4,000 UK jobs if the U.K. decided to leave. He said Brexit would be a "terrible deal" for the U.K. economy.

Citi has also warned its U.K. staff that it could redeploy its British businesses around Europe if it voted to exit the EU - dealing a blow to London's status as a financial hub. In a memo to employees, Citi's U.K. country officer said "we would need to rebalance our operations across the EU in order to access markets enabled through the European passporting regime."


'Many people in finance will lose jobs'

However, Leung points out that while there will be teething problems if the U.K. decides to exit, things will settle pretty quickly since banks have had a lot of time to prepare of this.

However, others think it will have a severe impact on the economy. TheCityUK points out that the U.K. economy gains hugely from the free movement of workers into and out of the country, including a boost to consumption and, indirectly, to tax revenues and service-sector employment brought about by the migration of skilled personnel.

While the result of the referendum is not known yet, the uncertainty surrounding it has already started to create worries among those working in the city.

An employee at a leading bank in the city told CNBC that a vote to leave, will be disastrous for the UK.

"Many people in finance will lose jobs (and in turn anyone who provides services to financial sector). JPM, HSBC have already come out saying jobs will be moving from the U.K. in Brexit scenario and am sure it will be same for many other banks, especially the non-UK banks," the source said wishing to remain anonymous due to the sensitive nature of this issue.

Another source said they had seen a massive impact on the business in the first quarter as decisions such as hiring have been put on ice, impacting trading and other areas of the business, the source said, adding that the financial services sector is hoping for a vote to remain in the EU.

Meanwhile, Leung told CNBC that the overall hiring numbers at the end of the year may still be the same as the last few years. "The difference will be that there will probably be more hiring in Q3 than we've seen in the past, partly to see what happens with the Brexit vote and some managers waiting for a solid Q2 to embolden them to pull the trigger."

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