Banking job vacancies have taken a nasty turn for the worse, and so have recruiters’ fortunes.

With banks struggling against writedowns and calls for the sale of their investment banking arms (in the case of UBS and Deutsche), this is hardly the time for hiring.

The resulting softness in the banking job market is reflected in new figures from recruitment firm Morgan McKinley: in March 2008 new financial services job opportunities were down 23% on the previous year.

More worryingly for anyone looking for a role, there are now 20% more candidates than jobs – an absolute difference of 1,753.

Recruiters are starting to suffer. Shares at Michael Page plummeted 10% this week after it revealed that profits from its UK banking division fell ‘in very, very low double percentage figures’ in the first quarter of 2008 vs. the same period of 2007.

Hiring freezes, but middle office still strong

Most banks are said to have imposed hiring freezes on front office positions: “Front office hiring at big banks is off 50%, probably more,” says one headhunter.

Optimists aren’t extinct yet, though. Upbeat observers point out that 2007 was a record year for banking recruitment, making recent reductions in job vacancies unfortunate but not unbearable.

“Middle office hiring is still active,” says Paula Maidens, director of financial services hiring at recruitment firm Robert Walters. “Product and risk control jobs are essential, regardless of market conditions.”

Jalpa Chandarana, manager of the investment management division of recruitment firm Joslin Rowe, is equally ebullient: “We have more jobs in investment management now than we’ve had for the past five years. Hiring in the investment manager market tends to be quite consistent.”