eFinancialCareers

If one phrase explains why banks got into so much trouble in the early noughties, it’s Chuck Prince’s assertion that Citigroup was “still dancing" in July 2007 despite the arrhythmic beat which left it with a nosebleed and as much as $3 trillion in nasty off-balance sheet assets.  Why did Citigroup keep on head banging? The simple answer is that its competitors were head banging too, and making big profits in... Read more

As we pointed out a few weeks ago, all things being equal to the first quarter, bonuses at Goldman Sachs should reach $675k this year. After conferring with various analysts, the Wall Street Journal appears to have reached a similar conclusion. It says Goldman’s on track to pay out around $700k per person this year, and that Morgan Stanley will pay around $340k. Both amounts are close to, or equal,... Read more

Hedge funds are suddenly doing ok: returns are up, redemptions are down and they’ve had the best start to the year in a decade. Unfortunately this does not mean that they will be paying large bonuses.Following closely on from last year’s disastrous performance, many hedge funds are still below the high water mark at which they can charge the 20% performance fees that become bonuses. Deprived of these, they’re having... Read more

After weeks of waiting patiently, we can now offer some insights into the state of the 2009 analyst bonus in IBD. UBS and Citigroup have both announced, and the numbers aren’t particularly pretty. However, it’s less painful than it might be because salaries have increased to compensate. According to persons specialized in the recruitment of analysts, bonus numbers at both banks are roughly similar as follows – • Analyst 1: £10-20k • Analyst... Read more

There’s something about risk which seems to lend itself to comprehensive studies of risk professionals’ salaries and bonuses. While the most pressing issue of the moment is what first year and second year analysts are being paid, we are instead therefore able to provide you with another, albeit more detailed, breakdown of pay expectations in the risk sector. This one is from risk recruitment firm GRS and is based on their... Read more

To our knowledge, four major banks have now increased salaries: UBS, BofA/Merrill Lynch, Morgan Stanley, and Citigroup. That leaves several banks that haven’t, most notably Goldman Sachs, JPMorgan, Deutsche Bank and Credit Suisse. Rumour has it that Credit Suisse already has salary hikes in the pipeline. Goldman, Deutsche and JPMorgan are silent on the subject. Do these banks need to raise salaries too? One level, no: all have come through the financial... Read more

When I wrote something last month saying that banks will pay large bonuses at their peril this year, someone said this wasn’t so and that banks have no need to consider the opinion of the general population. Events of this week suggest that that someone was wrong. After allegedly suggesting late last week that bonuses in 2009 will enormous, on Monday Goldman felt the need to deny that it said any such... Read more

While bankers’ base pay is rising and - as a proportion of total compensation - their bonuses are (meant to be) falling, the fund management pay trend appears to be moving in the opposite direction. According to a study by Create Research, 58% of fund managers have frozen base pay and have either moved or are moving towards a more performance-oriented compensation model. It comes at a time, when banks are... Read more

Following closely behind last week’s suggestion that $10m bonuses are going to resurface soon, is the claim, in yesterday’s Observer, that Goldman Sachs has primed its employees to expect the largest bonuses in the firm’s history this year. The paper cites ‘insiders,’ who say the firm has benefited from a lack of competition and soaring FICC revenues. Staff were apparently briefed on the good news last week. If the success... Read more

As we mentioned last month, Bank of America has been offering some very generous retention packages to its most prized employees. The New York Post has unearthed just how generous - Fares Noujaim, BofA's vice chairman of investment banking, is said to have been offered $15m over two years. A Merrill spokeswoman told the paper references to specific compensation levels were inaccurate but that the bank's taking, “steps necessary to... Read more

We pointed out some time ago that big bonuses will probably make a comeback in 2009. Now Breaking Views offers another perspective on why we're about to see the return of the eight figure payout. The article is for subscribers only, so a heavily summarised version follows in bullet points below. The third point is the most interesting - the populace may well cry foul at the resurgence of the... Read more

As everyone who has not spent the past six months in a cocoon or broadband notspot will know, fixed income trading has done particularly well in the first half of 2009. JPMorgan thinks 2009 will be a record year for fixed income revenues, with a 34% increase predicted over 2008. Equally, Credit Suisse analysts said in a note released this week that thanks to a combination of strong inventory gains, reversal... Read more

As we mentioned earlier this week, Citi has been dragging its heels about increasing salaries to offset TARP bonus restrictions. But now that it’s become clear that the bank won’t be repaying TARP and that rivals doing so will be liberated from related pay restrictions, the pressure is mounting on Citi to do something. Citi is evidently alert to the danger of its best bankers leaving for better paying... Read more

Interdealer broker Icap is expanding its equities business, and headhunters say it's paying some particularly generous packages to do so. According to one, Icap's offering a competitive base salary, plus a cash lump sum to new joiners in equity research and sales. "Base for managing directors is capped at £125k, but they're also offering a cash sign-on to compensate people for any loss of bonus or vested stock," he says. "The only... Read more

As we pointed out earlier today, Citigroup appears to have done little to increase its salaries, yet as a TARP-recipient has nevertheless succeeded in hiring people. Now Forbes goes some way to explaining why. Citi has apparently been paying some very generous guaranteed bonuses to people joining its equities and equity derivatives division. Among the recipients are said to be Rachel Lord, an executive in the equities group, and Stefanos... Read more

According to Bloomberg, today's the day on which the US government will announce which nine banks are free to repay TARP money - and evade some of the related pay restrictions - and which banks aren't. Despite plans to raise $33bn this week, Citigroup seems almost certain to fall into the category of banks which aren't. As the chart below, from Calculated Risk, suggests, Bank of America/Merrill is unlikely to be... Read more

Not long ago, we said that hedge fund managers aren’t making as much money as they used to. This does not appear to apply to Brevan Howard. According to The Times, Europe’s biggest hedge fund manager is dispersing £113.3m between 34 of its staff after doubling its operating profits. This kind of spending power should be good for the UK economy. It is a shame, therefore, that Brevan Howard has... Read more

When KKR announced its 2008 annual results this week, it wasn’t pretty: it made a $1.2bn annual pre-tax loss, following last year’s $815m pre-tax profit. There are signs that the dramatic decline in performance is taking its toll on pay. In normal circumstances, private equity executives receive a base salary, a bonus, and carried interest. Carried interest normally equates to 20% of a fund’s profits above a specified hurdle rate and... Read more

CNBC has produced a handy ranking of the S&P's leanest companies based on revenue and profit per employee. It shows, as we have stated before, that investment banking is nothing special. Ranked against the best in class from other industries, investment banking's finest - Goldman Sachs - didn't do too well last year. As the graphs below show, it was beaten by the best performers in the leisure, food beverage... Read more

Just as gazumping is allegedly making a comeback in the property market, so buybacks are allegedly back in the investment banking jobs market. Rumour has it that Citigroup analyst Simon Samuels, and team, who have been poached by BarCap, were nearly bought back by Citigroup, but ultimately left anyway. Headhunters say the practice is widespread. “People are increasingly unstable during their notice period,” says one. “Banks are offering big packages to persuade... Read more