How downsizing to a smaller bank could be beneficial for your career

WHEN most people dream of working in banking, their thoughts are usually drawn to the big names: Goldman Sachs, JP Morgan, Barclays, HSBC, and the like. But with major international banks restricting hiring and regulators clamping down on pay, small banks like Shawbrook, Aldermore and Metro Bank are snapping up displaced and disillusioned bankers in their droves. But would you want to work for one?

There are many in the UK who would like to see more new banks. Business secretary Vince Cable has supported the idea of creating of a regional bank in the south west from disposed Lloyds branches. Last month, founder and former chairman of Metro Bank Anthony Thomson predicted there will be between five and 15 new banks created over the next three to five years.

A refreshing outlook

Speaking off the record for business reasons, a senior banker with several years’ experience in banks of all sizes explains why he thinks people go small. “For senior professionals with a long career in the larger firms, a lifetime of long hours, internal politics, and little recognition of your hard work can take its toll. Moving to a smaller bank can give you a refreshing outlook on the industry.”

Anne McKenning of Arbuthnot Banking Group agrees. A smaller institution lends itself to a better work life balance with more of a family feel, she says, adding that smaller institutions tend to be bogged down by less bureaucracy. “You can have much more autonomy and a greater ability to make decisions,” says McKenning. There is also more interaction with clients, and this human face is one reason why some smaller banks might be doing well. Depending on the size of the firm, you could be working closely with and learning from some very successful individuals in your industry.

The disadvantage is that it may be harder to progress. You may have to wait for the person above you to move before you can do so yourself. Joining a rapidly growing institution could mitigate this somewhat, according to Metro Bank chief executive Craig Donaldson. Metro Bank hopes to expand its workforce from 650 at the start of the year to 1,000 by the end. “Working for a small, growing bank opens up opportunities,” says Donaldson.

Metro Bank is just one example of how downsizing doesn’t have to mean joining an immature organisation. Capital markets advisory firm STJ Advisors, for example, has grown its headcount from three to 50 over the last four years, recruiting from many of the world’s major players, including Bank of America and Deutsche Bank.

Meritocracy

Perhaps the biggest concern for many, however, is how their pay will be affected. Performance is crucial to bringing home big pay packets at investment banking boutiques in particular, and many worry they won’t be able to create high revenues without the backing of a global brand and marketing strategy.

But the difference in compensation structure may be a key selling point for some disillusioned bankers. Nader Bawany, partner of the Fairway Future Proof Programme, says that pay in the boutiques tends to be “eat what you kill” – low salary and high bonus – so high-performing professionals, frustrated with the lack of certainty surrounding variable pay in major banks, might be more satisfied in a performance-driven institution, even though they too face the EU’s ridiculous bonus cap.