Graduate: When a good job application arrives, a bank is likely to say yes

Constant rationalising and the advance of technology may leave those preparing to choose a career wary about approaching banks. Yet, says Paul Gosling, there are many excellent opportunities.

The prospects for graduates interested in a banking career are surprisingly good. Despite the squeeze in the investment banking sector and the closure of increasing numbers of retail branches, there are few signs that City and high street banks are reducing their intake of newly qualified graduates.

If anything, the opposite is the case. Several banks lost out when they failed to recruit graduates in past hard times, and there is now something of a void in their middle managements where fast-rising entrants from three years ago ought to be.

Banks have learnt the hard way not to cut back on graduate recruitment. "That happened in the recession, and people got burnt a bit because of that," says Paul Hodgson, assistant editor of Income Data Services' Management Pay Review. "There are shortages at particular levels because no graduates were taken on in the recession, or there was a big reduction [in intake], down from 200 to 30. There is now a huge demand for people with three years' experience.

"Banks are beginning to think hard about whether they should do this again. Even where they are down-sizing they may not cut-back again on recruitment of graduates."

The last survey by IDS found that the average starting salary in the finance sector, for last year's graduates, was pounds 14,153. That compares unfavourably with an average across the whole of the private sector of pounds 15,442. Banks' lower starting pay reflects the higher proportion of staff located outside London, while other private-sector pay figures are boosted by the inclusion of accountants and lawyers.

It might be expected that investment banks would be cutting back on graduate recruits, with BZW being re-structured and partially sold off, and NatWest Markets going through a bad few years. Retail banking, meanwhile, is going through its own revolution. Branch closures are taking place within high street banks, with the loss of thousands of jobs. But that mostly affects tellers, rather than high fliers.

Neil Rankin, editor of Employee Development Bulletin, published by IRS- Eclipse, says that its just-completed survey shows that banks' graduate recruitment intentions are typical of the economy as a whole. Vacancies are expected to fall over the next year, and pay is forecast to rise in line with inflation and alongside that of graduate entries into other sectors.

Lloyds-TSB says it is increasing its graduate recruitment. Barclays' retail arm says that it is always interested in good graduates. "They don't necessarily have to have a business degree," a spokeswoman says. "We are looking for people who are articulate, whose degree may be in English. It does help to have a business degree, but if people haven't got that degree it doesn't really matter."

Deutsche Morgan Grenfell's spokesman says: "We have certainly not changed our recruitment programme, and we don't see any reason to change it. We have just had 150 or so graduates on a training scheme."

A spokeswoman for NatWest Markets says that it will recruit as normal. "We have never had a huge campaign. We have a steady pool of graduates coming in, and that will continue. We are talking relatively small numbers, less than 50, and will continue to hire people as we need them."

NatWest's retail banking operation, though, has reduced the number of graduates it is recruiting, to about 50 a year, and is seeking higher- calibre entrants to go straight in as assistant managers of branches. All its recruits are seen as potential senior managers.

Tom Lovell, manager of Reed Graduates, believes that banking continues to be a good sector for graduates to enter. "We are seeing much more graduate recruitment activity this year than in the last couple of years," he says. "It is a combination of the major banks increasing the size of their graduate schemes, and many more of the smaller institutions starting to recruit in the field.

"The sector as a whole is looking to recruit high-calibre business minded graduates, and with a rising popularity of the vocational finance degree these graduates are very sought after. In addition, people with maths or related degrees are also in demand where banks are looking for statistical analysts for modelling, but good communication skills are a must."

Lorraine Traynor, a consultant specialising in graduate recruitment in the banking sector with Robert Half Personnel, confirms that graduates are in heavy demand by banks. "The last six months have extremely buoyant," she says. "There are very good prospects in both retail and investment banking. We are looking for more graduates coming through the door."