With a predicted 36% fall in volumes traded on the London Stock Exchange for 2008, finance professionals could be forgiven for assuming that the industry has called time on recruitment.

The figures certainly don’t look encouraging. To reinforce that dampening Stock Exchange prediction – from the Centre for Economics and Business Research consultancy – a joint study by accountancy firm Price Waterhouse Coopers and the CBI, released in April, put City job losses for March-June this year at 10,000 to 11,000. But that figure probably needs revising upwards now, with global bank UBS cutting 5,500 jobs in May, 1,000 of them expected to be in the City of London. The credit information company Experian believes that the number of UK job losses across banking and insurance could reach 40,000 over the next three years.

Recruitment is far from stagnant, however, although employers are undoubtedly showing a cautious approach to hiring. Technical areas such as compliance, the pensions sector and support functions such as human resources and marketing remain strong. While the downturn is likely to result in a net loss of jobs, there will continue to be opportunities for specialists and individuals who are prepared to be flexible.

Charles Davis, an economist at the CEBR, says the climate of uncertainty has brought a lot of corporate finance activity to a standstill. On the upside, he argues, areas such as commodities trading are strong and graduate recruitment is broadly holding up across banking, insurance and professional services. Also, in the long run, emerging economies in Asia will create opportunities as the global economy expands, he says.

Tara Ricks, managing director of financial services recruitment consultancy Joslin Rowe, says that while companies need to reassure shareholders that they are cost-effective, there are still pockets of recruitment activity. “Compliance and risk management remain buoyant, candidate-driven areas,” she claims. Also, there are signs that banks and finance houses are hunting for HR professionals and individuals with project and change management skills to help them to get through short-term difficulties.

The technical financial expertise available in London led the Japanese bank Nomura to invest in its base in the capital as a kind of talent and innovation factory. The bank has increased its presence in Europe from 1,700 to nearly 2,000 this year. Analysts who are recruited in London as part of an international programme spend six months learning the ropes before transferring to comparable businesses overseas. The aim is to foster relationships and exchanges of expertise across the bank’s international locations.

Stephen Sidebottom, head of HR, says Nomura is upbeat about future opportunities. “People here are very good at thinking globally. We have product and technical expertise around derivatives and credit business, for instance. The investor base in Asia is very keen to tap into that.”

The private banking and wealth management sector is also holding up. For example, HSBC is to recruit 110 planning managers and financial advisers.

Rob Taylor, UK chief executive of private and corporate bank Kleinwort Benson, says his operation has been protected from much of the recent market volatility because its income is largely derived from annuities. Its business is mainly private client work in portfolio management, deposits and mortgages. It has been expanding, opening offices in Cambridge, Birmingham and Manchester over the past 18 months. That said, Taylor admits the bank is seeing less new business this year than in 2007.

For him, the increased flow of talented people into the job market as a result of corporate cutbacks is good news. “We are probably in a position where we can afford to be a bit more choosy about the quality of candidates we look at,” Taylor says.

The finance sector is still a good choice for graduates and junior staff identified as high-flyers by their employers, says Thomas Drewry, founding partner of the head-hunter Veni Partners. In contrast to the downturn of the early 2000s, firms are being selective when reducing headcounts. “Last time, there was much more focus on the number of people who had to go in percentage terms. This time it is much more cost-related. They’re cutting positions like a managing director with 15 years’ experience and keeping the young and the brightest on the payroll. In 2004, banks came out of the dip completely underresourced at the junior end.”

Drewry agrees, however, that there will be a net job loss. “There’s just not enough positions to absorb all the people who are being let go.”

So how can candidates make themselves more employable? Be flexible on location, he says. India and China will provide good opportunities as banks build teams that bring together people with technical expertise gained in the UK market and those with local knowledge.

For specialists in areas already badly hit by the downturn, such as corporate finance, leveraged finance and investment banking, Drewry argues the case for taking a sabbatical or returning to study. An MBA would help workers to maintain contact with the business world as well as providing a new network of contacts.

Nonfinancial study, a period of travel or setting up a boutique advisory business are also viewed by potential employers as acceptable courses of action, he says. For people who have worked 12-hour days for 10 years, these are not risky compared with committing to a new long-hours job at a big financial player, only to be let go in the near future.

Times Recommends

• Inspirational leadership
• How to get a new job
• The reluctant CEO