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Banking industry

The Banking Talent Vacuum: A Legacy of the Financial Crisis

Strategic Insights

— 2 min read

The 2007 New York Marathon marked the beginning of a tumultuous era for Citigroup, as its chairman and CEO, Charles "Chuck" Prince, prepared to face the music. A report revealed that the bank would have to write down billions in leveraged and sub-prime loans, forcing Prince's resignation. This event triggered a chain reaction of executive departures, leaving a talent vacuum that still persists today. As the crisis's impact continues to be felt, banks are struggling to find suitable replacements for their top executives.

Key Takeaways:

  • Since the financial crisis, an entire generation of senior bankers has left the industry, either forced out or by their own choice.
  • In the UK alone, the chairman and CEO of Royal Bank of Scotland, Lloyds, HSBC, Barclays, and Santander have all changed at least once since the start of the crisis.
  • Standard Chartered's chairman, Sir John Peace, is under pressure to find a replacement for CEO Peter Sands, and it is likely that both men could leave within the year.
  • The lack of senior talent has led to a vacuum, with headhunters looking to hire executives from outside the UK, such as New Zealander Ross McEwan, who now runs the Royal Bank of Scotland, and Australian John McFarlane, who chairs Barclays.
  • The profession has become less attractive due to negative headlines about remuneration, increased regulation, and the potential for bankers to face prison time.
  • A recent survey found that while there are still 107 applications for every graduate banking job, there are 146 for the same roles at consumer goods companies, despite a £10-15,000 gap in starting salaries.
  • Bankers are no longer the conduits they once were, with their influence waning due to politicians' reluctance to fraternize with them and the growth of other financial sectors.

Statistics:

  • 107 applications for every graduate banking job (Association of Graduate Reporters survey)
  • 146 applications for the same roles at consumer goods companies (Association of Graduate Reporters survey)
  • £10-15,000 gap in starting salaries between banking and consumer goods companies (Association of Graduate Reporters survey)
  • 49 different occasions on which former US Treasury Secretary Tim Geithner called Larry Fink, head of BlackRock (analysis of phone records)
  • 18 month period during which Geithner called Fink at least 49 times (analysis of phone records)

Sources:

  • "A Sunday morning at the start of November 2007" by James Quinn (note: date of publication not specified, but article is likely from 2007)
  • Association of Graduate Reporters (source not specified, but likely a recent survey)
  • Analysis of former US Treasury Secretary Tim Geithner's phone records (source not specified, but likely a 2010 article)

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