Banks pledge huge City jobs boost

Significant increases in graduate recruitment planned for next year by leading investment banks

London's biggest investment banks are planning to increase graduate recruitment by up to 50 per cent next year as hopes of a recovery rise among senior bankers.

Goldman Sachs, Morgan Stanley, Lehman Brothers and Merrill Lynch have confirmed to The Independent that they are planning significant increases in their graduate intakes in 2004. Smaller banks, such as NM Rothschild, have also revealed plans to boost graduate numbers.

Graduates choosing to go into the City next year could also see starting salaries rise sharply as banks compete for the best talent. City institutions are already worrying that they may have to fight to persuade top graduates that a career in the Square Mile is an attractive, long-term option given the thousands of jobs shed by banks over the past two years.

A spokeswoman for Morgan Stanley said the US-owned investment bank was looking for 150 graduates next autumn compared with the 105 recruited this year.

"We are also going to be increasing the number of MBAs we take on from 17 to about 30," she said.

Goldman Sachs, the most famous investment bank where many graduates have become multi-millionaires, said it was looking to increase its graduate intake by 25 per cent next year. However, it refused to say how many college students it had recruited in 2003.

Callum Forrest, the head of recruitment in Europe, said: "There is a return of cautious optimism in the City and we will be increasing our graduate intake at analyst level."

A spokesman for Lehman Brothers said: "In certain areas we are expecting an increase in graduate recruitment of 50 per cent. These would mainly be in capital markets such as equities and fixed income.

"There is a feeling that the environment is getting better and that will be reflected in the number of graduates we recruit in 2004," he said.

A straw poll by The Independent found most banks were expecting to pay graduates a starting salary of £35,000 plus the chance of a first year bonus of about £4,000-£5,000.

Senior bankers confirmed that salaries next year for graduates would be at least their 2003 levels and would probably rise as banks jockey for position in anticipation of an upturn in their businesses over the next 18 months.

Investment banks have begun to feel more confident about their prospects after a rally in world stock markets since March. The FTSE 100 index of leading UK companies has risen 33 per cent, raising hopes that big stock market flotations may make a comeback.

So far in the UK most floats have been at the smaller end of the market, although there have been some exceptions such as Yell, the directories business, and Wolfson Microelectronics.

The City has also seen some recovery in large takeovers and mergers this year with bids for Safeway from William M Morrison and the merger of Granada and Carlton, the ITV companies.

But with signs of recovery becoming clearer, bankers are already warning that the market for graduate recruits could overheat. George Wilson, the human resources director of Rothschild, said: "I think in this next year things are going to get tougher for those banks recruiting. The mood in the City is picking up. People feel the business opportunities in investment banking are going to be greater and so people are going to come back to the graduate well, where they have been absent in the last 2-3 years.

"At the same time graduates are going to have to be persuaded that the City is a good place to go after university given what we have seen over the past couple of years with job losses in general."