Linklaters has hired Accenture for client service advice as it pushes for growth.
Consultancy giant Accenture has been looking at the Magic Circle law firm’s technology, templates and processes in order to improve its interactions with its clients, Financial News has learned.
The project includes exploring the use of generative AI in client pitches, according to a person familiar with the situation.
The work with Accenture focuses on the firm’s business services teams in a drive to make them more client-centric, the people said.
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“Our business teams play an integral role in the outstanding service we offer to clients. We want to ensure that we continue to be equipped to do that in the most effective ways possible,” a spokesperson for Linklaters said in a statement.
The process is being led by Linklaters’ chief growth officer Lucy Murphy, according to people familiar with the situation.
Murphy joined the firm in September last year having previously worked for Magic Circle firms Allen & Overy and Freshfields Bruckhaus Deringer in senior business services roles.
Murphy was given a brief of driving forward the firm’s client strategy when she joined last year.
“Lucy will play a pivotal role in ensuring that we are even more client centric and that everything we do as a firm is to the benefit of our clients,” Linklaters’ managing partner Paul Lewis said in September.
Linklaters has been scrambling to harness generative AI amid a rush in the professional services sector to adopt the new technology.
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The firm launched an AI chatbot for its lawyers in March last year which was built using Microsoft’s Azure OpenAI service.
Last month the firm said it was promoting the co-head of its AI steering group Shilpa Bhandarkar to partner, in a sign of its commitment to the new technology.
Linklaters is not the only Magic Circle law firm turning to consultancy firms for advice. Its rival Allen & Overy has tapped KPMG and McKinsey to advise on its merger with US firm Shearman & Sterling which is scheduled to go live in May, Law.com reported.
To contact the author of this story with feedback or news, email Edin Imsirovic
HSBC’s global banking and markets unit jumped 8% last year as the UK lender increased fees from dealmaking and maintained trading revenue in most asset classes.
The UK lender posted revenue of $16.1bn for its global banking and markets unit last year, according to its annual accounts. Fees from capital markets and M&A work surged 36%, with HSBC’s investment bank benefiting from a resurgence in debt underwriting revenue.
HSBC’s pre-tax profit of $30.3bn for 2023 was a record for the bank and an increase of 78%, but still below the $34bn expected by analysts. In a statement, chief executive Noel Quinn said that the results “reflected four years of hard work and the strength of our balance sheet in a higher interest rate environment.”
HSBC finished 16th in the investment banking fee league tables last year, according to data provider Dealogic, with 1.3% share of the market. This is up from 17th a year earlier.
The UK lender’s markets and securities services business posted revenue of $9bn, which was largely in line with 2022. However, equity trading fees of $552m were nearly half of the $1bn it earned in the unit in 2022.
HSBC’s GBM business dipped 4% in the final quarter of the year to $3.7bn.
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HSBC has bolstered its UK investment bank over the past year, hiring two senior dealmakers for corporate broking in July, but faces stiff competition from Barclays, which is aiming to consolidate its first place finish in the UK dealmaking fee league tables last year. In recent months, hires within its investment bank have focused on its core markets of China and the Middle East.
Investment banks have struggled against an ongoing drought in deals, with Wall Street banks and Europeans alike posting sharp declines in M&A fees in 2023. UK rival Barclays unveiled a 12% decline in investment banking fees for 2023, led by a 23% slump in revenue from M&A work.
Barclays also unveiled its first investor day since 2014, separating its business into five key units including separating its investment bank from its corporate bank. While the UK lender will look to reduce its reliance on its investment bank, it is not pulling back and within its dealmaking team intends to shift the balance away from debt underwriting to do more M&A and equity capital markets work.
Deutsche Bank’s origination and advisory business was up by 25% in 2023, buoyed by a rebound in debt capital markets activity as its M&A unit slipped 25%. A hiring spree of 50 managing directors at the German lender last year aims to shift the balance of its investment bank towards more M&A and equity capital markets work.
To contact the author of this story with feedback or news, email Paul Clarke
Financial services firms have been cutting jobs for the past year, with no signs of letting up.
Banks, asset managers and consultancies have all cut swathes of jobs in recent months.
City jobs dried up in the last quarter of 2023, with the number of available financial services roles falling 42% compared with the fourth quarter of 2022, according to Morgan McKinley’s London Employment Monitor.
During the post-pandemic deal boom many major finance firms went on hiring sprees, which left them overstaffed, and a slower job market has meant that fewer of those staff moved on.
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Morgan Stanley and PwC both pointed to lower staff attrition rates as part of their motivation for cutting jobs.
Banks have been characteristically brutal in their job cuts, and major disruption such as the merger of UBS with Credit Suisse and Citigroup’s radical overhaul are set to lead to thousands of roles going.
In recent months banks have been followed by asset managers, which are shedding jobs in a tough climate for active fund houses too.
Consultancy and accountancy firms have also cut thousands of jobs as demand for deal advice dries up in a slower market.
These are the banks, consultancy firms and asset managers cutting jobs:
Banks
UBS expects half of planned $13bn cost-cuts to come from employees
UBS rolls out fresh layoffs as Credit Suisse integration continues
Citigroup to cut 20,000 roles in Jane Fraser’s radical overhaul
Citigroup offers generous redundancy package to laid-off UK bankers
Barclays cut 5,000 jobs last year in cost-reduction push
Deutsche Bank to cut 3,500 more jobs in cost-cutting push
Nomura cuts 60 investment bank jobs in difficult dealmaking conditions
Societe Generale to axe 900 jobs in France
Rothschild-owned Redburn Atlantic cuts 20 staff amid UK equity drought
Asset managers
BlackRock to cull 600 jobs as it eyes ‘opportunities for growth’
Abrdn outflows top £12bn as group prepares to cut 500 jobs
Baillie Gifford to cut jobs after fixed income overhaul
Consultancy
EY launches fresh round of UK job cuts
EY is laying off US partners amid tough economic conditions
Deloitte UK to axe 100 jobs amid slow deals market
To contact the author of this story with feedback or news, email James Booth
When Bob Diamond got the band back together and installed former Barclays investment bank boss Rich Ricci at the helm of City broker Panmure Gordon in 2020, he immediately started unwinding a loss-making foray into new areas of dealmaking.
An unsuccessful rebrand as a “21st-century merchant bank” — a term rarely used since the 1990s — lost £35m at Panmure in two years as it splurged on new dealmakers. Ricci promised to “get back to basics” as a corporate broker, a move that seemed shrewd as the firm returned to a profit of £3m in 2021.
But a year later, Panmure slipped to a £16m loss as brokers battled a 20-year low in IPOs and tepid research fees in the wake of the EU’s MiFID II regulation. Now, Ricci and Diamond are making a fresh play to revive the broker, which was founded in 1876, by merging with rival Liberum in an all-share deal unveiled on 16 January.
The move comes at time when brokers are battling for survival amid an ongoing dearth of UK deals. Richard Morecombe, who has been installed as president of the newly rebranded Panmure Liberum, said the aim was always to get bigger, and the broker had long accepted that consolidation was necessary.
“When we opened talks with Liberum, it was just about the only broker in the City we hadn’t already spoken to,” he told Financial News in an interview shortly after the tie-up was announced on 16 January.
Bidhi Bhoma, the former boss of Liberum who becomes deputy CEO in the new venture, said that the “kernels” of a conversation about a merger started during the summer, but the two firms started talking seriously about a tie-up during the autumn.
READCity brokers Panmure Gordon and Liberum to merge
Panmure Liberum is the latest example of a tie-up between two big players in the sector, bringing together around 290 staff and 250 UK corporate clients. It comes at a time when a dearth of capital markets activity has seen pure play brokers facing what one banker described as an “existential crisis”.
Consolidation — touted as a necessary evil in the close-knit sector for years — surged in 2023 as Deutsche Bank paid £410m for the largest City broker, Numis, and Cenkos and FinnCap merged to create a new investment bank called Cavendish.
Diamond, the former Barclays chief executive who left in 2012 amid a Libor-rigging scandal, took control of Panmure through his investment firm Atlas Merchant Capital in 2018, and the firm lost around £70m over the four years to 2022. After the £3m profit in 2021, Panmure report a loss of £16.6m a year later — the latest figures available — while Liberum unveiled its first ever annual pre-tax loss of £11m in 2022 after a 43% decline in revenue.
While 2023 numbers have not been published, Bhoma said that the combined businesses generated around £70m in revenue last year as markets improved. It sees a cost base of £50m in the full year 2025 as the two businesses come together, he added.
With the struggles of the sector, it’s difficult not to see the merger of Panmure and Liberum as a crisis-driven move to save costs. However, people familiar with the situation said that Ricci and Diamond see the mid-market broking space as an under-served opportunity to gain market share. Diamond has often said that the financial services sector broadly is too fragmented, and the UK investment banking market that many executives believe has bottomed out could be seen as an obvious target.
“We think this is a positive and strong move, as opposed to a defensive move,” said Morecombe. “We believe in public equity capital markets. We all understand that things need to change to encourage more investment into UK public markets, but we believe we will be well-positioned to be a very big player in that role going forward.”
READ Deutsche shrugs off mixed history of bank deals with purchase of Numis
Atlas Merchant Capital, which had around 76% ownership of Panmure Gordon, will become the biggest shareholder of the new entity, with approximately 37%, followed by Liberum founder Shane Le Prevost, with the two together holding the majority of the shares. Qatari investors, who previously had a stake in Panmure, will end up with around 5% of the new venture.
Diamond’s investment vehicle has also pledged more financial backing to the newly merged broker.
While both Panmure and Liberum executives have pointed to a lack of overlap in clients and activities, by bringing together the two businesses cost-cutting is expected. Bhoma said there would be “very material cost synergies” through the merger.
“How these businesses operate on a day-to-day basis, the trading systems, software, premises, other suppliers… those synergies are very material,” he said. “There will be a degree of people synergy, but the non-people synergies are just as material.”
One driver for a surge in broker tie-ups has been joining back-office costs, which are often the first to go during a merger. While revenue-generating roles are often slow to be cut, executives at rivals say that many staff have been unsettled by ongoing rumours of mergers and have been easier to prise out.
In September, Clayton Bush, a managing director in Liberum’s consumer and leisure investment banking team, joined Berenberg, while Panmure’s head of natural resources dealmaking John Prior quit in January to launch his own venture.
Panmure Liberum’s 250 corporate clients mean it has the largest number of UK Plc customers of any broker. Data provider Adviser Rankings puts it at 14th by market capitalisation of clients, a more common metric of success among big investment banks, which focus on FTSE 100 clients.
One banker at a rival said that Panmure Liberum will need to ensure the strategy goes beyond just having a large number of corporate clients. “The headline brokership is a loss leader,” they said. “You need actual transactions.”
Before the merger, Liberum was already focused on expanding into new areas of investment banking, particularly doing more M&A work. Most City brokers accepted that there was a need to diversify revenue streams, even before the dearth in UK equity deals.
Morecombe said the the new venture would be “all cap” and will include servicing clients with a value of less than £100m as well as “some FTSE 100 clients”.
“We will also have an element of diversification,” he said. “That comes from having a range of sectors, but we also see more diversification to include the likes of more M&A, maybe private M&A and debt advisory.”
Meanwhile, Bhoma said that the deep freeze of IPO activity is showing signs of improving. “We are actively pitching for IPOs in 2024, ones that are going to be material in size,” he said. “That was not something that was going on at the start of 2023, so it’s definitely improving.”
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To contact the author of this story with feedback or news, email Paul Clarke
EY is set to pay some of its UK consultants to take time away from the business, the latest sign of pressure on a strained market for advisory services.
The Big Four firm has launched a “time out summer programme” for financial services consulting staff, according to an internal memo seen by Financial News.
Employees who are not deployed on an assignment or without an assignment from March to August 2024 can leave their role for up to 12 weeks.
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The time out will be unpaid, but staff will receive a bonus of 25% of their notional salary on their return.
The scheme is the latest in a line of money-saving initiatives by leading consultancy firms, which have faced the challenge of highly paid staff sitting idle as key clients like banks and private equity houses suffer from a deal slump and face their own cost pressures.
Practices such as restructuring have held up, but other workstreams have flatlined, raising tough decisions over whether headcount should be trimmed in a bid to keep partner profits strong.
Consulting is bearing the brunt of Deloitte’s 800 planned job cuts. One hundred UK deal advisers are being slashed by KPMG, while PwC is getting rid of 600 roles. Many global consultancies are also pushing back graduate start dates to save immediate costs, and US sector leaders including McKinsey and Boston Consulting Group are set to rack up thousands of redundancies.
EY’s memo says the time out programme creates opportunities “to achieve balance in your work and personal lives” and “constructively use your time either travelling, spending time with family or just time out for yourself.”
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To be allowed time off, staff must be graded at least “performing as expected”. They will receive their usual benefits for the time away, which must be a minimum of four weeks.
EY can reject requests to join the scheme at its discretion, and requires staff to submit plans to use around 40% of their holiday by the end of June and 70% by the end of August, because the time out supplements existing annual leave.
The short-term pause suggests EY is betting on a deals rebound later in 2024. Bankers are holding out high hopes that UK success stories including Starling, Monzo and Oaknorth could pick London to float and rekindle sluggish capital markets as the government and private sector overhaul listings rules and prepare to launch a new intermittent trading venue to breath life back into the City.
“EY’s UK financial services consulting business is operating an ‘Employee TimeOut’ initiative, offering its people four to twelve weeks of unpaid leave over the summer months,” an EY spokesperson confirmed.
To contact the author of this story with feedback or news, email Justin Cash