There can be a hefty difference between perception and reality on debt markets pay these days. One headhunter recalls: "A senior banker called me when I was on a ski lift at Christmas. He said he was going to get only $1 million in the current bonus cycle. He wanted to know whether he had been hard done by as he thought he was worth $2 million. I got a researcher to check what someone in his position and with his job title would usually earn right now. I called him back and said 'you're worth $600,000, so you're doing well'."
One headhunter reckons a mid-range head of origination in Europe probably averages $750,000 in salary and bonus, and a mid-range head of syndicate $600,000. But the conclusions vary. A June salary survey from recruitment firm Napier Scott suggests that syndicate officials tend to earn more than originators. But another headhunter says: "Salary surveys usually overestimate how much people are paid, which puts everyone's noses even further out of joint about what they are getting."
Banks are no longer prepared to let wages account for 80% or 90% of their total revenue. "If you want a $2 million head of origination, you can have one and some people certainly pay for it," says Gindre. "But most people realize the days of the big package are over as firms are very careful to control their cost-revenue ratios."
Guaranteed bonuses are on the way out. Instead there is a tendency for banks to offer, god forbid, bonuses related to actual performance.
Gindre says that only the very best bankers will have seen their bonuses maintained. "The overall bonus pool is better controlled at most banks, but banks still have to reward the 20% of the people that do 80% of the business and identify the guys who really deserve to be paid well so the bank doesn't lose them."
Areas where there are skills shortages still pay more. Dor says compensation levels are up on 2002 in the German market and for commercial mortgage-backed securities. "In all other areas, while the market continues to improve, overall compensation levels at the senior end are still approximately 20% down on 2000 levels."
