The Federal Reserve has published the results of its March 2024 Senior Financial Officer Survey (SFOS), exploring banks’ reserve balance management strategies, deposit pricing, and expectations for changes in balance sheet size and composition.
MBK Search looks at the survey and what jobs will be in demand in the banking sector over the next 12 months.
Loan Growth Outpaces Other Assets
While most respondents expect no significant changes in asset levels, the loans category stands out. Respondents are evenly split between those expecting loan levels to remain stable and those forecasting an increase of more than 2 per cent but less than or equal to 5 per cent.
Reserves Strategies Prioritize Stability
A plurality of respondents say that their bank plans to maintain current levels of reserve balances, Level 1 high-quality liquid assets (HQLA), and Level 2 HQLA. This suggests focusing on stability and liquidity in the face of potential market uncertainties.
Lowest Comfortable Level of Reserves (LCLOR) Holds Steady
Most respondents reported no change in their LCLOR estimate since the previous survey. Factors such as retail deposit outflow assumptions and broader market conditions were cited as important for those reporting changes.
Deposit Betas Reflect Balancing Act
Average cumulative retail deposit betas from March 2022 to March 2024 were reported at 40 per cent, with expectations for a slight increase to 42 per cent by September 2024. Wholesale operational and non-operational deposit betas are expected to remain mostly steady at 59 per cent and 76 per cent, respectively.
What Does This Mean for Hiring?
The survey results underscore the need for skilled risk management, compliance, and internal audit professionals who can navigate an evolving financial landscape. Banks should prioritize hiring individuals with experience in liquidity risk management, credit risk analysis, and interest rate risk modeling.
Banks will likely hire for several key roles to enhance their capabilities in managing balance sheets, reserves, and deposit rates. Here are the specific roles and the rationale behind their necessity:
Liquidity Risk Manager
Given the survey’s emphasis on maintaining stable reserve levels and the preference for additional reserves as a buffer, this role will be critical in managing and optimizing the bank’s liquidity. This position involves monitoring liquidity metrics, conducting stress tests, and ensuring compliance with regulatory requirements.
Treasury Analyst
With the survey highlighting the need to manage reserves and balance sheet sizes effectively, Treasury Analysts will help strategically allocate the bank’s assets and liabilities. They will analyze market trends, forecast cash flows, and recommend investment strategies to maintain the required liquidity and reserve levels.
Deposit Product Manager
As banks expect to adjust deposit betas to manage deposit balances, having a dedicated manager to oversee the deposit products will be crucial. This role will involve setting deposit rates, developing promotional strategies, and analyzing customer behavior to retain and attract depositors.
Compliance Officer
The survey indicates a strong focus on regulatory compliance and risk management. Compliance Officers will be essential in navigating the complex regulatory landscape, conducting internal audits, and ensuring the bank’s practices align with regulatory expectations.
Financial Analyst
With the need to maintain balance sheet stability and manage reserve levels effectively, Financial Analysts will be vital in providing insights and recommendations based on financial data. Their analyses will support the bank’s strategic planning and risk management initiatives.
| Job Title | Base Salary Range (US dollars) |
| Liquidity Risk Manager | $90,000 – $150,000 |
| Treasury Analyst | $60,000 – $100,000 |
| Deposit Product Manager | $80,000 – $130,000 |
| Compliance Officer | $70,000 – $120,000 |
| Financial Analyst | $55,000 – $90,000 |
