eFinancialCareers

Scottish financial firms have finally had a reality check and admitted they need to reduce employment numbers after all.

In the latest industry survey by Scottish Financial Enterprise, 19% of financial institutions reported a drop in headcount in Q4 of 2007 – up from 7% last time around.

Firms looking to bolster their teams this year fell by 11% to 35%, and 46% expect headcount to remain stable.

“These quarterly results very much reflect the environment in which we are operating,” says Owen Kelly, chief executive of the SFE. “It is quite volatile and some decline in confidence is unsurprising.”

The investment management sector north of the border is the most pessimistic over its future expectations, with 57% predicting a slip in business prospects into 2009. However, in Scotland’s mainstay, asset servicing, 50% are expecting a surge in business in the next 12 months.

Colin Grieve, managing consultant at recruiters Head Resourcing, reckons the past few weeks in particular have seen a sudden hiring halt: “It’s not been too bad over the first quarter, but now it seems a lot of projects have been put on ice and some sectors have embarked on a hiring freeze. Corporate banking, or anything involved directly with lending, which has been buoyant over the last year, has ceased all activity.”

HBOS, the UK’s biggest mortgage lender and Scotland’s second largest bank, has revealed pressure on its margins this year.

Speaking at a banking conference in London, HBOS finance director Mike Ellis said: “Margins are more difficult to predict in such uncertain market conditions, particularly given the extent of Libor [London interbank offered rates] and base rate risk, but the longer term prospects are more favourable, given the significant asset repricing currently under way.”