eFinancialCareers

Higher, lower – predictions for IT spend in i-banks seem like a game of Play Your Cards Right. Analysts have finally settled in the pessimism camp.

At the beginning of the year there was a cautious optimism surrounding IT budgets, but the Bear Stearns blow has seen the balloon of hopefulness deflate.

Larry Tabb, CEO of IT think-tank TABB Group, says: “Bear Stearns alone was probably in the $800m to $1bn range in terms of IT spend.”

And David Easthope, an analyst at research firm Celent, adds: “For some larger banks, IT budgets could be down by as much as 15%,” depending on their sub-prime exposure.

Perhaps not surprisingly, one bank that remains buoyant on IT spend is Goldman Sachs. Its Q1 report reveals that in the three months ending 29 February, it spent $186m on communications and technology – a 24% rise on the same period last year.

But away from the international perspective, what are the prospects for dear old Blighty? IT research firm Pierre Audoin Consultants (PAC) has lowered its expectations for the UK market – from a predicted increase of 7.7% to 4.6%.

However, Rajeena Brar, lead analyst at PAC, reckons banks will still have to spend money on getting up to speed with regulatory requirements like the Markets in Financial Instruments Directive (MiFID) and a new FSA directive demanding that all electronic communications be recorded by March 2009.

“Banks will have to start spending money on databases to both store and access that information,” she says.

What’s more, the silver lining of both the current market turmoil and recent incidences of alleged rogue trading is a surge in demand for risk management IT specialists.

“Banks are pouring money into improving things like systems controls, access controls (applying things like biometrics to this area) and general IT security,” says Brar.

And this has transferred to the recruitment market, according to Stephen Grant, managing director of IT recruiters Cititec: “Any roles that involve Murex, Calypso or any risk management systems are really quite buoyant at the moment."