Bonus rejig puts paid to City’s spring jobs spree

* Hires may be put off until “supertax” lapses in April

* MD pay at $1-$2.5 mln, senior bankers $4 mln plus

By Quentin Webb

LONDON, Feb 18 (BestGrowthStock) – Britain’s one-off “supertax” and
new longer-term payout systems have put paid to London’s
traditional springtime merry-go-round of City bankers moving
firms soon after they pocket their bonuses.

Barring exceptional hires, banks may be loath to poach staff
before April 6, when Chancellor Alistair Darling’s one-off 50
percent “supertax” on all bonuses over 25,000 pounds is set to
expire. Any hire soon after that could also attract scrutiny.

But recruiters still expect this year to be a busy one,
after cheap money, a rapid recovery in financial markets and a
deluge of rights issues helped many banks enjoy a far better
than expected 2009.

“The work in progress and the sentiment coming into 2010 is
just a world away from where we were this time last year,” said
one senior recruiter who, like the other headhunters contacted
by Reuters, declined to be identified.

But this person added: “It’s not gung-ho, ‘Oh my God, I must
have bodies!’ at all.

“It’s very seriously thinking, ‘What we are doing with our
business, how are we positioning ourselves?’, with a heavy
emphasis on senior people and rainmakers”, the recruiter said,
referring to well-connected bankers who pull in lots of
business.

The Financial Services Authority (FSA) has pressed most big
banks operating in London to defer at least three-fifths of
bonuses if they exceed 1 million pounds ($1.58 million). That
means any new employer has to match several years of future
payouts — although the upfront costs will be limited.

“The concept of passing ‘Go’, collecting your bonus, and
then being an inexpensive hire — relatively speaking — is now
gone,” the recruiter said.

Banks continue to covet senior staff for hot areas such as
natural resources and the so-called financial institutions group
(FIG) — the team advising banks and insurers that is one of the
biggest revenue generators in almost every investment bank.

FILLING GAPS

Despite public and political uproar, senior bankers can
still expect to command packages totalling millions of dollars
— even if much of that will not materialise for years.

Sought-after areas may include restructuring and leveraged
finance, a sector that was drastically pared back when the
credit crisis hit, some of the recruiters said.

Based on 2009 pay, managing directors (MDs) can expect to
command anywhere from about $1 million to $2.5 million a year in
total compensation, the recruiters estimated.

Senior product heads, such as a head of European mergers and
acquisitions (M&A) or FIG, could hope to get $4 million-plus.

Some firms, such as Nomura Holdings (8604.T: ) and Barclays
Plc (BARC.L: ) unit Barclays Capital, are still building their
London franchises, while boutiques such as Greenhill & Co
(GHL.N: ) and Moelis & Co may look to expand further.

Other houses may have gaps to fill, such as Bank of America
Merrill Lynch, where Bank of America’s (BAC.N: ) takeover of
Merrill was followed by several senior departures.

Conversely bankers at some institutions might feel underpaid
compared to their peers and seek to move.

Earlier this month it emerged that a trio of senior bankers
had left Royal Bank of Scotland (RBS.L: ), as scrutiny builds on
the bonuses the part-nationalised bank will pay. [ID:nLDE61E21R]

Banks have cut compensation ratios — the proportion of
revenues that go out as pay — to about 40 percent or lower, and
made other moves to counter the supertax: Credit Suisse, for
example, has cut bonuses for its 400 British MDs by 30 percent.
[ID:nLDE60I1DE]

Across the City, as London’s financial district is known, an
overwhelming majority of financial services firms predict more
recruitment. A January poll of 124 institutions by recruiters
Morgan McKinley found 83 percent expected hiring across the
sector to rise in 2010.

Investing Research

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Bonus rejig puts paid to City’s spring jobs spree