Entrants for banking exams in the City of London and the wider finance sector plummeted last year in the run-up to and aftermath of the shock Brexit vote, it has been revealed.
Simon Culhane, chief executive of the City’s examinations and ethics professional body, the Chartered Institute for Securities & Investment (CISI), is worried the academic slump may damage the financial centre’s “critical mass” of qualified staff.
In recent years between 9,000 and 10,000 entrants on average have taken CISI’s examinations annually, down from about 14,000 four years ago.
However, last year that figure slumped by about a third to 6,000 entrants. “Examinations are a proxy for entry into the banking market. It was a big shock,” Culhane said.
“We know that the banks had a very difficult 2015 and 2016. Everyone thought that once the uncertainty about the Brexit vote was out of the way it might galvanise a recovery, but there was no recovery.”
He said it was possible that young professionals had been deterred from getting their banking industry qualifications by the reports of financial institutions potentially moving some operations overseas to protect their access to the European Union after Brexit.
Banking giant HSBC repeated at its recent annual results that it may move 1,000 of its jobs from London to Paris over the next two years depending on the outcome of Brexit negotiations.
Culhane said: “The joy of London for the industry has always been its critical mass. You can walk around and see a wide variety of contacts. But business hates uncertainty and until there is clarity on Brexit decisions will be postponed.
“We are in for a difficult period as a number of banks are keeping all options open.”
The CISI boss said the plunge in young professionals taking the banking industry’s keynote exams could not be blamed solely on Brexit. But he added that the vote to leave “has damaged the City mood music”, including around the now virtually collapsed proposed £24 billion merger of the London Stock Exchange and Deutsche Börse.
Culhane said the developments should also worry Chancellor Philip Hammond ahead of this week’s Budget, as relatively senior level bankers “tend to be in the 1 per cent of the population that pay 30 per cent of the taxes”.
He said CISI was partly insulated against last year’s slide in UK banking examinations as it also operates in 41 overseas jurisdictions.
“We decided long ago not to put all our eggs in one basket, he said. “Currently, 60 per cent of our revenues are UK and 40 per cent overseas. We now want to get that split to 50-50 by 2020.”