House

HOUSE, Issue 32

….to the latest edition of House, where we are seeing a continuation in the unseasonal rush to hire within banking, asset management, corporates and consulting. Two significant global moves this month included Mike Roemer leaving Barclays to take up a Global CCO position at embattled Wells Fargo and Andrew Morris stepping down from Fidelity, where he was their Global Head of Compliance.

We are also seeing US law firms continue to hire FCPA partners into their Asian offices, with Kirkland & Ellis continuing to grow with the hire of Richard Sharpe from Clifford Chance. International consulting firms are looking to increase headcount. with a real focus on financial crime prevention. On the flip side though we are definitely seeing evidence that banking compliance and financial crime prevention teams will be reducing in size. Finally Data, Data, Data, how to use it how is this change in focus affecting hiring trends across compliance and investigations.

The hiring curve has flattened after a 10 year steady rise

…the increase in size of compliance functions within global investment banks over the last 10 years has seen a steady upward curve akin to the value of bitcoin in the last 12 months. However the ‘arms race’ is over and following meetings in London and Hong Kong this month we are confidently declaring the curve is flattening out,and in the next two years we anticipate it will dip. The average compliance department at a US or European Investment Bank is anything from 2000-3000 people. HSBC was well documented as having hired over 5000 people into regulatory positions within 2012-2015 and JP Morgan committed to hiring 3,000 in 2013 alone.

The overriding sentiment we have been picking up on is that it is back to business as usual at many of these banks, especially the US houses. Remediation is largely complete, monitorships and consent orders less frequent or things of the past with the Trump administration seen as much more bank friendly.. We are hearing from senior management that it is just not practical to maintain such large regulatory functions. Michael Corbett, the Citi CEO was quoted as saying, ‘We spend over 2 Billion USD on compliance and have over 4,000 staff, it’s not sustainable’

Compliance was not only proving a huge cost but it was eating into earnings. While large regulatory departments are here to stay and at many banks they remain a board level position, on a par with the CRO, CFO and CTO, their size and cost will likely reduce by 30% over the next 3 years.

Data Data Data

In previous editions of House, we have highlighted the rise in prominence of monitoring and testing functions, as well as assurance and risk assessment teams. These teams too are evolving and the common theme we keep hearing is Data. The technology exists now to pull out key management information from huge amounts of data and compliance departments are adapting too. One global Managing Director in London this month described how they are now more focused on hiring people capable of using and developing tools to analyse data rather than individuals with compliance experience. In their opinion such individuals could deliver an outsized benefit to the compliance department and the firm in discussions with regulators and internal stakeholders.

Where to find these people? is there an indigenous source? The Big 4 have been focussing on data for the last couple of years, as have the technology focussed management consulting firms like Accenture. The trick is trying to persuade these people to move into a career in compliance, when we are competing with top strategy firms, large corporates, high frequency trading firms and even the front office of the bank itself. If we can persuade more data scientists, and tech savvy people into compliance, we think they will see a very fast career path.

Contractors - Arion House can help! Interim resource starting Monday.

We are seeing a real demand for contractors in this period, with bonuses due, many are reluctant to move, if you are looking for some resource to start straight away to cover a recent resignation, maternity leave or to complete a project, please reach out as we have a large book of exceptional contractors.

Finally - on behalf of all at Arion House, we would like to wish you a very happy Christmas and the best of luck for the New Year.

Please look out for our New Year special edition with our predictions for the year ahead, some useful data on comp and bonuses, and our first interview with a regulatory professional. and a thought piece on

‘WHERE WILL WE FIND THE COMPLIANCE OFFICERS OF THE FUTURE?