ABS specialists sought after in growing market
The firm estimated that European ABS issuance grew 16% in 2002 from the year before, to €120b, as corporates found it difficult to borrow in the capital markets. Half of this sum represented mortgage-backed securities (MBS).
Deborah Dor, Mantaray's managing director, said ABS staff with expertise in the more esoteric parts of the market were especially in demand.
In a quarterly market overview, the firm said the UK continued to dominate the more esoteric deals. 'But the Spanish, Portuguese, Dutch, French and Belgian markets are expected to progressively increase the levels of residential mortgage-backed securities (RMBS), commercial mortgage-backed securities (CMBS) and collateralised loan obligations issuance over the coming year.'
The Italian market was also growing strongly, especially in synthetic deals, consumer loans and leasing.
'Germany remains the giant in terms of European unexploited potential,' the firm said. 'Bankers therefore continue to monitor the German market for signs of increased activity, as securitisation technology has not picked up as quickly as expected.'
Staff in demand included credit derivative originators and distributors with the relevant experience. "Distribution now requires a higher level of specialisation with specialist
sales people mostly in ABS and derivatives being very highly valued," said Dor.
Language skills were in great demand, particularly for staff working on French and Italian deals, according to Mantaray.
Innovative deals in recent months had involved a number of collateralised debt obligation issues, as well as issues of hedge fund related credit fund obligations handled by Deutsche Bank, Merrill Lynch and CSFB.
Dor said that despite the healthy state of the market, bonuses for ABS staff were typically down by 30% this year from last time, as they often had to subsidise under-performing departments of their banks.
Some banks had also shed ABS staff because of requirements that all departments reduce headcount.
Typical total compensation at managing director level for 2002 was $500,000 to $750,000, according to Dor. Vice presidents might earn from $350,000 to more than $450,000.
The outlook for 2003 was healthy. 'Given the increased issuance, profitability of the asset class and expected growth in continental Europe, we expect that most houses will be looking to enhance CMBS, whole business, principal finance and/or pan-European country coverage,' Mantaray said.
'As banks increasingly differentiate between top and average performers, we expect that the most sought after professionals, with the desired skill set, will continue to receive premium market bids.'
The firm said Deutsche Bank, Morgan Stanley, JP Morgan, Citigroup and Barclays Capital continued to dominate the issuance league tables.
It expected Barclays to try to enhance its CDO business in 2003. ABN Amro, Societe Generale and Dredner Kleinwort Wasserstein were continuing to increase their market share of the European RMBS market, while CSFB had recently aligned its business towards the CMBS and real estate principal finance businesses.
