- David Friedland, Citigroup’s co-head of North America investment banking, said buyout firms are still aggressively recruiting young bankers despite indications last year that they would slow down, adding that he hopes it slows but is not sure much has changed.
- The promised restraint was specific. Apollo told prospective investment banking candidates in 2025 that it would not interview or extend offers for jobs starting in 2027, following complaints from banks. Citi’s experience suggests that commitment has not translated into a market-wide slowdown.
- Citigroup this week cut its analyst programme to two years from three, accelerating promotion and pay for junior bankers, with current third-year analysts promoted January 1 subject to performance. The full progression from analyst to vice president falls to five and a half years from six and a half.
- Other measures have already been tried. JPMorgan said it would dismiss any analyst accepting an outside offer within 18 months of joining, after recruits were found skipping mandatory onboarding to interview at private equity firms, and Citi, Goldman Sachs and Morgan Stanley introduced requirements that juniors disclose accepting jobs elsewhere.
What Happened?
Friedland said it is unfortunate and unfair to young bankers that firms recruit so early in their careers, and that top talent has opportunities, with Citi simply trying to make staying more interesting and rewarding for those who want to. He noted the shift has prompted wide discussion among young financiers, saying his 23-year-old son’s group chats filled with friends exchanging links about the Citigroup announcement. Expanding the investment bank is a priority for chief executive Jane Fraser, who recruited Vis Raghavan in 2024 to lead the effort, and he has since hired numerous bankers from rivals, particularly JPMorgan.
Why It Matters?
Voluntary restraint among competitors for a scarce resource is structurally unstable, and this is a clean illustration. Apollo announced it would delay recruiting after pressure from banks, yet a senior Citi executive says the practice has not meaningfully slowed, which is what happens when the first firm to defect from an informal agreement captures the best candidates. The same dynamic appears elsewhere in the market, most visibly in AI, where the industry response to safety concerns has taken the form of voluntary commitments negotiated with an administration that rejects regulation. Agreements without enforcement among rivals rarely survive the incentive to break them. Banks are competing on the lever they have rather than the one that works. Private equity offers carried interest, a share of investment profits compounding over a career, and no bank salary and bonus structure matches that for someone who expects to succeed. Unable to compete on economics, banks compete on time to seniority, which means moving an entire analyst cohort onto associate compensation a year earlier, every year, permanently. That is a structural increase in the compensation base adopted defensively, and it does not address why juniors leave. There is a second reason to shorten these programmes that nobody is discussing. The three-year analyst apprenticeship existed to produce modelling, formatting and document preparation while teaching the craft through repetition. As AI tools absorb a share of that work, the training content thins and a shorter programme follows naturally. The stated rationale and the unstated one point the same way, and the firms most exposed are those whose junior pyramid assumed a certain volume of manual work.
What Next?
Watch whether other banks match the two-year timeline, since one firm shortening forces the rest to follow or lose candidates, making the compensation effect industry-wide. Citigroup compensation expense in coming quarters will show the cost. The more interesting question is whether retention actually improves, because if private equity continues recruiting in a banker’s first months then earlier promotion changes little. Watch also whether analyst class sizes shrink, which would be the clearest evidence that AI tools are reducing junior work rather than simply accelerating careers. For Citi, market share in advisory and underwriting is the measure of whether the broader hiring push is working.
Affected Tickers and Coins: C, APO, JPM, GS, MS, KKR, BX
Source: Bloomberg
