Much as banks like to say that they’re fully committed to hiring a pipeline of junior talent, when things get difficult they tend to say one thing and do another. Hence, their recruitment of university graduates was slashed after the dotcom crash of the early 2000s and again after the financial crisis of 2008.
In both cases, there were instances of banks cancelling summer internships or delaying existing hires. For example, after the financial crisis, students who thought they were joining full time in summer 2008 were told to wait and come in summer 2009. Some graduate programmes for 2009 were also filled entirely with interns from summer 2008. If you didn’t get an internship, you therefore had no hope, and even if you did get an internship, you had less chance of converting it into a full time job.
It’s early days, but there are signs that this might be happening again. Evercore, the M&A focused bank which cut six per cent of staff in January before the pandemic even started, is now paying its graduate hires to stay away for a while.
The Wall Street Journal reports that Evercore is offering college graduates who were due to start full time this summer $15k to go away until January 2021. If they remain away until summer 2021, Evercore will give them $25k.
As money for nothing, this sounds pretty generous…except it also comes with a risk. While in theory you might get to spend the next year hanging out on a beach in Vietnam before turning up at Evercore in 12 months’ time, no one knows what will happen during the interim. – Who’s to say you won’t spend the next year partially locked down at home? Or that the economic situation won’t worsen and banks will decide simply not to recruit juniors at all in 2021? Even if you do get to sit on a beach, it won’t be entirely stress free.
That Evercore is valiantly trying to shunt this year’s entry-level hires into starting in 2021 is also bad news for anyone a) doing an internship there this summer or b) planning on applying full time for next year. If too many students from 2020 accept the offer of $25k to delay until 2021, there will be substantially fewer places for the next cohort. In this way, hiring gets messed-up for a generation of students.
Evercore is an M&A boutique and M&A has been particularly badly hit by the virus, so entry level hiring might be less affected in other business lines (eg. trading). It’s also the case that if you do get a graduate banking job during a downturn, you can benefit later on. – The classes of both 2001 and 2008 were greatly diminished and those cohorts remained small throughout their careers. When dealmaking bounced-back, the supply of bankers from those periods was therefore so diminished that anyone who did start out in the downturn was in huge demand and able to command higher pay. Every cloud…
Sarah Butcher – Read more on efinancialcareers.com