LONDON, June 23 — Wall Street names that have been among the most buffeted in recent months — Merrill Lynch, UBS and Citigroup — are hiking pay for their top investment bankers in an attempt to stop an exodus of talent, the Financial Times reported.
Citing insiders and rivals, the paper yesterday said market salary rates for managing directors have jumped from about US$250,000 (RM875,000) just a few months ago to closer to US$400,000.
Between late last year and last month, banks that went on an expansion spree such as Barclays Capital, Credit Suisse and Deutsche Bank had plundered hundreds of senior bankers from their troubled rivals which had been forced to accept huge government bailouts, in particular Merrill and UBS, said the FT in an online report.
In one of the latest high-profile grabs, Credit Suisse last week announced that UBS veteran Tee Fong Seng will become vice-chairman of its private banking operations in the Asia- Pacific.
“I would say UBS and Merrill have each lost 25 per cent of their best people,” the FT quoted Patrick Field, chairman of London-based financial headhunter Hanover Search, as saying.
But now the beleaguered banks are fighting back.
“Since the middle of May it has got far more difficult to get the people we want,” one senior banker told the newspaper.
In the past four or five weeks, UBS, Merrill and Morgan Stanley have all increased their basic pay substantially, partly driven by a need to hold on to good staff and partly to offset the threat of the United States government slapping a tax or cap on executive bonuses, said the FT.
It said Citi now plans to do the same.
The bank last Friday was hit with the shock departure of Ajay Banga, head of its crucial Asia-Pacific operations — which contributed 30 per cent of group revenues last year.
Banga will be joining MasterCard as president and chief operating officer, making him next in line to become chief executive of the credit card company next year.
In addition, MasterCard is paying Banga a US$4.2 million signing-on fee and stock and options worth about US$7 million.
Citi, however, is one of the few large banks still tied to government aid, making it subject to strict controls on compensation.
As a senior Citi executive, a large chunk of Banga's compensation was deferred last year. He received a US$500,000 salary and a US$3.6 million cash retention award, payable in equal instalments over four years, according to Bloomberg News.
Lately, though, there have been some small signs of the trampled banks scoring coups of their own. Last week, UBS hired a new strategy chief, Vesna Nevistic, from Goldman Sachs while last month it took on Rajeev Misra, formerly of Deutsche Bank, as global head of credit.
As well as base salary hikes, banks are once more offering guaranteed bonuses to staff approached with lucrative offers by rivals. Bank of America, for example, has seen off attempts to poach top Merrill bankers by matching or topping offers.
As a result of such competition — and in spite of the continuing recession — market rates for bankers have been running close to the boom-time highs of two years ago, said the FT.
“In some cases we've been paying up to 80 per cent of 2007,” one senior executive at an expanding bank was quoted as saying.
Such developments are likely to stir concern among US regulators as increasing basic pay and guaranteeing bonuses run directly counter to their efforts to push banks towards restructuring pay to better reflect their long- term performance. — The Straits Times
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