Typically now is about the time we see news emerging of the bonus season. Sadly there hasn’t been a great deal of hype to date, neither in the press nor amongst the halls of our clients. We have all become conditioned that ‘bonuses are not what they once were’ or that, ‘fixed remuneration is the new barometer of how well I am doing’. Our analysis of the 2014/15 and 2013/14 bonus season has found that they were both a relatively lukewarm affair. In fact the emphasis across in-house legal seemed to be on based salary moves. All in all, total compensation has remained relatively flat.

‘What will this year hold?’ many are asking. We tend to see a hiring spike in December/January, which often leads to the flurry of movement we all enjoy at the end of Q1 and start of Q2. This year sadly we can’t point to that. In fact, the opposite needs to be said for in-house legal, where most hiring partners are reporting increasing pressure to recruit internally. We will follow up with a further piece on the hiring trends for 2016 in our ‘End of Year Analysis’ on 18th December, but it is key to point out that in-house legal recruitment has retrenched following a strong Q2 and Q3 in 2015. Our view is that hiring/completions will be significantly down on last year and that January headcount is looking anything but a dead cert.

With a lack of fluidity in the recruitment market, retention becomes less of an issue. This factored in with the cost of ongoing regulatory enforcement issues; an ever growing cost to compliance, and measured growth amongst the banks doesn’t create the right environment for us to get excited (sadly). The Governor of the Bank of England reassured us that our banking system is now in good shape – the question is at what cost? Our view is that everything points to another lacklustre bonus season, with little by way of profit, growth or easing up of regulation – it seems plausible that bonuses could even be down on last year.

Is this a good thing for the industry? Should we be grateful that bankers’ bonuses won’t feature in the press for all the wrong reasons? In reality, we don’t feel this will be beneficial to the industry. The tightening of the belts, if indeed we are right, will be borne by the huge numbers of in-house lawyers. It may just push people towards alternative sectors though!

The increasing value of High Net Worth Individuals (HNWI) suggests financial services firms are endeavouring to gain increased coverage of this lucrative market. Oxfam says it expects 2016 to see over 50% of the world’s wealth being owned by the richest 1%. Banks with strength in this marketplace, most notably Swiss institutions, are ensuring that new products are increasingly available in both the retail and investment banking markets. This coupled with huge internal resource being assigned to identifying, tracking and recording HNWI’s is evidence enough to suggest that the global banks and asset managers are as active as ever in this space.

The regulatory environment clearly is and will continue to both impact and influence all areas of banking business and it appears that the private banking and wealth management sectors are not immune.

MiFID II may prove to have the greatest impact in this sector, by allowing asset managers to utilise the banks’ distribution platforms through sub-advisory channels. Furthermore, there is a risk that the forthcoming ring fencing regulations may impact the banks’ ability to service their private banking clients. If the banks are limited in their ability to share products and information between banking lines, they are at risk of HNWI’s migrating their business to the dedicated asset managers and independent private wealth managers.

As with all forthcoming regulatory reforms only time will tell as to the impacts, but what we can be certain of is the importance to banks and other financial service firm’s attention being focussed on their private wealth clients as much as their large institutional ones. It seems that with the constantly developing regulatory landscape, the legal guidelines and when relevant legal advice around commercial implementation could be crucial in the private banking market which is a market that is only increasing in size and importance globally.

Following a number of recent trips to various European markets, it is clear that the evolving European regulation within financial services has opened a door for traditional borrowers to become lenders within the European marketplace. The shift asset managers and private equity houses have made into the lending market has given rise to a new form of ‘shadow banking’.

Lawyers across the continent who have seen their investment bank clients hamstrung by increased regulations are breathing a sigh of relief, and are gearing up for the new wave across Europe as investment from the US, UK and Continental European based lenders increases.

The good news for law firms is that whilst shadow banking has firmly arrived in the UK and is very much present in Germany, markets such as Italy are just getting started. Whilst the likes of Blackstone and BlackRock are well on their journey, domestic funds are just beginning to evolve, which is good news for the lawyers on the ground in these jurisdictions. Whilst domestic regulations and legislation are seemingly more challenging in certain markets, these domestic businesses will provide local lawyers with domestic clients to cultivate and provide a balance between local and network origination.

There has been a lot said about the new dawn of securitisation across Europe and from our discussions with those within the banks and alternative lenders, it is clear that in some European markets the dam has been opened, and in others it is only a matter of time. As regulations and legislations continue to evolve, the competition in the shadow banking marketplace will only increase. There is a clear demand for securitisation and structured finance lawyers, and this will continue to come into focus, but those who have their finger on the pulse of the regulation and regulatory change will have a real chance to prosper in the coming years.

This new method of providing liquidity to European markets is rising like the tide across Europe, and for law firms with a foothold in the financial services marketplace, the only thing to do is try and catch the wave.