Graphic: Degrees of difficulty

In accordance with the unwritten rules of job cutting, graduates, as the last in, should be the first out when the finance sector is struggling. But while some banks, such as AIB, have cut their recruitment programmes this year, others are as determined as ever to secure their share of fresh talent. So what kind of graduates are employers looking for, how can they stand out in an even tighter job market and what is the outlook for prospective newcomers?

Industry watchers say there are fewer jobs in the pipeline for graduates, although banks are reluctant to admit this is the case. “They won’t say it on the record but it looks like there are a lot more graduate interns starting summer placements now than the banks will have jobs for next July,” says Sarah Butcher, editor of recruitment website efinancialcareers.com. “They recruited their summer interns at the start of this year and things have got worse since.”

Student bodies have already noticed the impact of the crunch. Gordon Chesterman, director of Cambridge University’s careers service, says it is being felt most keenly by final-year students who did not secure jobs last summer. “The problem is that the banks make so many job offers after second-year internships that they’ve already filled most of the places on offer,” he explains. “In the past, students who were offered jobs at that point might have waited to explore the rest of the market before accepting, but because of their anxieties about the crunch, they’ve all snapped them up early this year.”

While graduates are feeling the squeeze and some banks, such as AIB, have shelved their graduate schemes this year, there are also positive signs. At Citi, where big redundancies have been announced globally, UK graduate hiring numbers for 2008 are in line with last year. At Morgan Stanley and Deutsche Bank, the graduate recruitment drive is in full swing. Even UBS, which has announced 5,500 redundancies, plans similar graduate recruitment to last year.

Goldman Sachs’ summer hiring programme is its biggest ever. “There is likely to be some concern among graduates,” says Sarah Crawford, the investment bank’s head of graduate recruitment for Europe, the Middle East and Africa. “We want them to hear the message that we are looking to hire very healthy numbers. This is a cyclical industry. Despite the challenging market conditions, more than 400 interns are about to arrive for their summer placements and we anticipate offering permanent jobs [for a 2009 start] to about 75% of them.”

The jobs situation is more encouraging in commercial banking. The global retail and commercial wing of Barclays, for example, has increased target recruitment figures by 48% this year and expects another rise in 2009.

With so many posts to fill, how do banks locate the right candidates? Most finance businesses market themselves to students at careers fairs and through presentations on campus. About 80% of jobs go to graduates who have completed 10-week summer internships at the end of their second year. Competition for internships is fierce but Butcher says it’s worth the battle. “Internships are good as they mean students can go into their final year knowing they have a job offer.”

Recruitment usually begins with an online application and a numerical and logical reasoning test. Then there is an assessment centre where communication, decision-making, problem-solving and presentation skills are tested.

Academically, graduates need at least a 2:1, ideally from one of the Russell Group of universities, which includes Cambridge, Oxford and Imperial College London, and in some cases only a first will do. A degree in economics isn’t essential as most banks look for graduates from a range of backgrounds. “We’re searching for students from all disciplines who are motivated and interested, reach a high academic standard, have strong problem-solving and teamwork skills, and can prove their drive and commitment,” says Sallyann Birchall, Deutsche Bank’s head of UK graduate recruiting.

They are also looking for candidates who have something extra to offer. “Top-tier academics isn’t enough any more,” says Laura Kirk at financial recruiter WH Marks Sattin. “You have to prove your business acumen. Spend time making your own investments. They’ll want to see that you have a real passion for the industry so if you have a spare hundred pounds, invest it. If not, run a shadow portfolio. Take unpaid internships, help at a family business, anything that proves you have that spark.”

Cambridge engineering graduate Matthew Nix, 24, who started work in May as an analyst in the oil and gas team of investment bank UBS, says: “The graduate recruitment process is quite long and stressful but also enjoyable as we were given opportunities to get to know the firm and the people working here. Getting as much of a feel for the culture of a firm as possible is crucial; it was the biggest factor in my decision to join UBS.

“As I was preparing to apply, the credit crisis was in its infant stages but I didn’t have any doubts about entering the process. There were just as many recruitment events around Cambridge as there were in previous years and all the companies, not just the banks, were competing to attract the best graduates.”

Davina Mendelsohn, 23, will start work in September at Deutsche Bank. She says the company assured her that “whatever the market conditions, it would continue to place an emphasis on graduate recruitment, which I found reassuring”.

Mendelsohn, who studied humanities and history at Oxford, says: “I feel this is the best time to enter the financial sector. The current market conditions have forced bankers to approach their roles much more critically, which in turn has facilitated a deeper understanding of financial instruments and their implications. It means I’ll be entering the sector during a climate of learning.”

For graduates who do not land a position this year, there are other options. A further academic qualification, such as an MSC, could enhance your CV or you could study for an Associate Chartered Accountant qualification at a big accounting firm and move into banking later. Targeting small stockbrokers could be more fruitful than applying only to better-known companies.

The next few years look likely to be tough but a flexible approach should guarantee a foothold in the industry for good candidates. Anybody with their heart set on a career in mergers and acquisitions or investment banking may have to be willing to start in a different area.

“The outlook is difficult to predict,” says Brian Hood, Citi’s head of graduate recruitment. “We may see small reductions in the London intakes but there will be readjustments and shifts between the sectors that should balance the overall numbers.”

According to Kirk, graduates can take comfort from the fact that banks have learnt from past mistakes. “There is probably a 40% drop in recruitment in the financial sector, but the last time things were this bad, in 2001-02, lots of banks stopped hiring graduates and were forced to hire talent from accountancy firms to fill the gaps they were left with. They won’t make the same mistake again, so for the right candidates the graduate jobs will be out there.”

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