Bankers’ pay still on downward spiral
Hong Kong – Asian bankers saw their pay drop by as much as 40% last year, as a result of the economic slowdown.
According to Reuters, many bankers also did not receive a bonus in 2011, with pay for top performing bankers remaining flat.
“The saying internally is that flat is the new up,” a Hong Kong-based vice-president at a U.S. investment bank said.
Within Credit Suisse's Asia Fixed Income, Currencies and Commodities (FICC) division, as many as half the staff received no bonus. However, the top 6 performers were paid more than last year, while the remaining staff were paid 30% to 40% less.
Compensation for bankers at Citigroup’s institutional clients division fell 30%, and poor performers saw their pay drop drastically - by as much as 70%. Sources told Reuters revenues generated by Asian investment banking in the short term are not enough to support the rate of growth in the region. Furthermore, bosses are not eager to subsidise Asia’s expansion with US or Europe revenues on the expectation of growth.
“The Asia pay slowdown has taken longer than elsewhere, because of two factors that distorted the ecosystem. Firstly, you had regional players like Samsung Securities, Nomura, and Daiwa, as well as Jefferies, pumping money into the system as they tried to build a bigger presence,” a head of investment banking for the region said.
“Secondly, you had a strategic premium for Asia that meant global bosses have been willing to overpay here. Now, however, there's a real problem because revenues have been stalled for the best part of a year.”
Industry watchers are expecting the doom and gloom to continue, as top performers worry about job security in the turbulent economy. A source inside Credit Suisse said layoffs have been happening in a slow trickle rather than in one fell swoop.
“We [sector bankers] are under pressure,” says one industry coverage banker at a leading European firm. “There's intense pressure on every banker to deliver, and the sector guys will be the first to fall. It's all about client access, so if you rely on your country guy who has the language skills for all your business you could be in trouble.”
Reuters said on average, bankers in Asia can earn the following overall (salary plus bonus) pay based on 2011 data: senior managing directors can earn between $1and $2 million (S$1.26m – S$2.52m); junior MDs $600,000-$1.25 million (S$756,436 - S41.57m); executive directors $500,000-$1 million (S$630,406 – S$1.26m); vice presidents $350,000-$650,000 (S$441,300-S$819,557) and associates $200,000-$425,000 (S$252,162 – S$535,902).
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