FRANKFURT/LONDON - BEFORE they even start working 80-hour weeks, graduates sense tougher times in investment banking, and either by choice or necessity, some are already planning careers elsewhere.
Financial companies have slashed at least 70,000 jobs in the United States and Europe as a result of the credit crisis, making students uneasy as they face the reality of a sector which looks more bruising and less lucrative than a year ago.
Banking has been a popular choice among graduates in recent years. Five of the top 30 most desirable recruiters in Europe are banks, with Deutsche Bank leading the pack, according to a 2007 survey of some 40,000 students by Berlin-based research firm Trendence.
Although there is no evidence to suggest graduates are turning away en masse, universities are concerned for next year's intake and, with banks such as Citigroup and Bear Stearns cutting jobs, some students are less keen.
'The more I met people from the investment banking sector, the less I liked what I saw,' said 21-year-old Ms Marion Deneuville, a London School of Economics student who investigated jobs with large investment banks such as Goldman Sachs, JPMorgan and Merrill Lynch.
'You used to be able to move up to the next level in a bank after three to five years, but that's not guaranteed now, they are letting people go.
'It's always been incredibly competitive and now it's even harder. The perks, like big expense accounts to balance out the 80-hour weeks, are gone.' Instead, she has opted for a consultancy job.
Another student at a top European school is back on the job market after having a job offer from Bear Stearns withdrawn in the middle of exams.
'You would have thought there would be some loyalty to the individual, but it really isn't the case in this sector,' said the student, speaking on condition of anonymity to protect their employment prospects. 'No one went out of their way to let us know what was going on.' Investment bankers are an elite corps who can reap huge fees by helping clients raise money via issues of stocks and debt and advising on mergers and acquisitions.
'There is no possible career, with the exception perhaps of private equity and hedge funds ... where you can make as much money as you can on the Wall Street,' said author and former investment banker Bill Cohan at a discussion on compensation in financial firms earlier this year.
But with financial institutions suffering at least US$300 billion (S$409 billion) of write-downs, losses and credit provisions since mid-2007, they are now cutting back on the perks.
Some have reduced cell phone subsidies or car vouchers and banned business class travel for some divisions. Many in banking expect pay packages will also fall.
Students determined to go into banking are hoping the turmoil on financial markets won't hurt their careers in the long run.
'There is this 'hire and fire' mentality in investment banking where tomorrow I could have no job. Students are seeking reassurance and are asking questions,' said Mr Christian Marx, head of the student council at the Frankfurt School of Finance and Management, a feeder institution for large banks.
Universities say most banks have promised to honour this year's job offers because most were made over a year ago, before the full extent of the subprime fallout was known.
They say banks have learnt from the last downturn when they froze graduate recruitment and were left with a skills shortage.
Selling their product, the universities and business schools also point out that graduates are good value for money.
'It's more cost-effective to lay off the more experienced members of the workforce and take on cheap, eager graduates who will work an 120-hour week,' said Rolf Tilmes, professor at Germany's European Business School whose graduates are often sponsored by big banks.
'It's always good to have young blood,' he added.
The supply is there - Morgan Stanley says applications made in 2007/08 for its European analyst programmes were up more than 40 per cent on the previous year.
'One trend we are seeing is that students are now attracted to a wider range of roles, such as sales and trading, asset management, private wealth management and technology, as well as the traditional investment banking and M&A positions,' said Ms Stephanie Ahrens, head of EMEA Graduate Recruitment at the bank.
Banks are also seeking more specialist skills, such as foreign languages and physics, engineering or maths qualifications combined with computing, as they build expanding divisions in emerging markets or high-tech black box trading.
When Morgan Stanley went to Cambridge University last month, it was seeking candidates for quantitative finance.
Mature students are also opting to go into less risky areas, swapping investment banking for private banking, according to Beat Bernet, professor at Switzerland's University of St. Gallen, which counts CEOs of major banks among its graduates.
'This (change) definitely has to do with uncertainty in the investment banking sector,' he said.
And universities say they are worried about next year's intake. Merrill Lynch, JP Morgan and Goldman Sachs declined to give details on their graduate recruitment, and other large banks did not reply to requests for figures.
Universities are advising students to look at alternatives, such as working in the finance departments of the multinationals which regularly fish for graduates but which fell out of favour with graduates in the boom of investment banking.
Nonetheless, students with sophisticated skills hope that in a weaker job market, they will be more in demand.
'Obviously the job market has changed, these are tense times now,' said 21-year-old Mr Konstantin Kraus, who skipped a year at school and has trained with Deutsche Bank through his studies at the Frankfurt School.
'The problem with some of these financial products is that people did not understand what was behind them - banks will be looking for people who do.' -- REUTERS