Banking sector backwash affects Michael Page

Outrage aimed at some of Britain’s scandal-hit banks is likely to prolong painful financial job market conditions, recruiter Michael Page International said after posting a slip in quarterly profit due to the crisis in the euro zone.

Like many recruiters, the group, which places people in accounting, financial and legal jobs across 35 countries, is battling a slowdown in markets as clients hold off on hiring or moving jobs in the light of unstable economic conditions.

The banking sector has been hard hit and forced to cut staff.

Chief executive Steve Ingham said yesterday: “Banking is tough, no surprise. Let us be real, the headlines over the last few weeks, they do not help.”

Many people in Britain blame the banking sector for sending the economy into recession and such resentment may harden political resolve to tighten regulatory controls, which could crimp profits.

“I think it is fair to say that the more negative the headlines, the less (banking) recruitment is going on generally,” Mr Ingham said.

Michael Page posted a second-quarter gross profit of £138m, 6.6 per cent below what was its second-highest quarter on record in the same period in 2011, but 1.6 per cent up on the quieter first quarter of 2012.

While it expected full-year operating profit to be broadly in line with market estimates, the group said its third quarter was likely to be challenging, as euro-zone issues, austerity measures and high unemployment figures hit customer confidence and combine with its seasonally quieter holiday period.

In its largest region, Europe, Middle East and Africa, second-quarter gross profit fell 10 per cent on last year, with the UK down nine per cent and Asia Pacific the only region to grow against 2011 comparators.

“Geographically, it . . . reflects what we are hearing in the economic news – tougher in southern Europe particularly, clearly not improving in the UK, but elsewhere in Asia Pacific things still relatively strong,” Mr Ingham said.

Trading conditions in banking, which represents eight percent of group gross profit compared with 11 per cent a year ago, would remain challenging, the group said, adding it would continue investing in newer markets.

Overall gross profit growth in its finance and accounting division, which accounts for 42 per cent of the group, fell by almost 13 per cent in the second quarter. “We are trying to make sure that if we have to take the pain in a particular sector we’ve got other sectors that are growing to replace them,” said Mr Ingham, pointing to 10 percent gross profit growth in its engineering and procurement division.

In an interview with Reuters news agency last month, Michael Page said high-growth Asian and Latin American markets would help it ride out tough European conditions.