Boutiques attract bank staff as bonus curbs bite

* Greater flexibility on pay attracting staff

* Reputational damage to banks encouraging defections

By Chris Vellacott

LONDON, Feb 11 (BestGrowthStock) – Headhunters are reporting a
pick-up in interest from private bankers from large institutions
who want to defect to small investment boutiques as curbs on
bonuses blunt the allure of big operators.

“Of the people I talk to, about 20-25 percent of them are
now saying they are very open to talking to a boutique,” said
Sophie De Ferranti, a private wealth management specialist at
London headhunter Execuzen.

“Before it would have been very difficult to extract someone
from a Merrills (BAC.N: ) or a Deutsche Bank (DBKGn.DE: ).”

Boutiques have no need to cap bonuses, unlike larger banks
which carry hefty bills from government rescue packages made
during the credit crisis and do not want to be seen paying
lavish salaries.

“That will force quite a lot of people out of these types of
brand names into boutiques that have more flexibility,” De
Ferranti said.

Private bankers at director level in Britain can expect to
negotiate a base salary of around 150,000 pounds ($234,500),
rising to between 350,000-400,000 pounds for a divisional head,
plus about 15-30 percent of the revenues they generate.

After the financial crisis, many banks curbed the commission
on new business, which reached as high as 50 percent at some
institutions, but raised the base salary to compensate from an
average closer to 120,000 pounds, De Ferranti said.

Credit Suisse (CSGN.VX: ) announced on Thursday it will pay
staff an average bonus of 144,000 Swiss francs ($135,500) for
2009, considerably lower than the 180,000 francs averaged in
2007. [ID:nLDE61A0QE]

Private bankers are also frustrated at pay being depressed
by the impact of volatile – but unrelated – investment banking
businesses within the same group.

“If one division of an organisation really catches a cold,
then the bonus pool … is going to be reduced so the link
between what you do and your reward is much more blurred than in
a boutique,” said David Rosier, chairman of London boutique
Thurleigh Investment Managers and a former senior executive at
Merrill Lynch.

Industry experts also point to lower morale at some of the
larger institutions, suffering reputational damage after the
financial crisis, as well as a broader trend towards greater
mobility among finance executives.

“The reputational issue is a big factor… Some of the
institutions that had wonderful names in the wealth management
industry are no longer an enhancement to the business winning
process,” said Guy Hudson, a director at London boutique
Heartwood, which has taken staff from UBS (UBSN.VX: ) and Coutts
in the past year.

A high profile beneficiary of the trend is Vestra Wealth,
founded in 2008 by David Scott who previously headed UBS’
(UBSN.VX: ) wealth management and stockbroking divisions in
Britain.

Vestra and UBS were locked in a furious row during 2008
after dozens of staff from UBS’s UK wealth management division
left to join the new company which has also recruited from
Barclays (BARC.L: ) Goldman Sachs (GS.N: ), Merrill Lynch and
Coutts.

($1=.6397 Pound)

($1=1.063 Swiss Franc)

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(Editing by David Cowell)

(For the Hedge Hub blog: http://blogs.reuters.com/hedgehub)

(For Global Investing:
http://blogs.reuters.com/globalinvesting)

Boutiques attract bank staff as bonus curbs bite