ABS recruitment bucks the trend

Those well versed in structuring and quantitative research will also find opportunities.

However, compensation levels, like last year, are not expected to keep pace. Studies show that bonuses levels for ABS staff in 2002 were down by around 30% from 2001 because, in many banks, they had to subsidise the under-performing departments.

The demarcation between the star and weak performers has also widened considerably, but the good news is that firms are willing to pay above the odds for more experienced staff, especially in the specialist fields of credit derivatives, trading and structuring. Reports show that star credit specialists were rewarded in 2002, unlike their colleagues in equity sales, trading, research and corporate finance, who had their numbers and packages savaged.

On average, compensation packages were slightly down last year for the niche credit players, but senior people still walked away with six and seven-figure bonuses. A survey by Jared James, a UK-based search firm, found that senior credit derivative traders with five years' experience took home a typical bonus of 300% to 600% of salary last year.

Senior equity derivative sales enjoyed bonuses of 150% to 350%, which was slightly more than their credit derivative sales colleagues. Overall, those working in the credit and equity derivative fields pocketed bonuses ranging between 50% to 200% of their salaries in 2002.

A salary survey by Napier Scott confirms the trend. The winners were senior credit derivatives staff, employed by the bulge brackets, whose bonuses were in the region of 700% of salary in 2002. Top of the pyramid were managing directors in synthetic structuring, with a base of 125,000 (€175,000) and bonus of 1.13m, followed by managing directors in credit default swap trading, who had the same base with a 875,000 bonus.

The pay was less, but still not too bad for those employed by second and third-tier firms. The former group paid a managing director in synthetic structuring a base of 115,000 and bonus of 635,000, while the latter rewarded its top performers in this area with a base of 100,000 and bonus of 300,000.

Bradley Rood, managing director of Jared James, says recent and impending regulation has put ABS transactions on the continental European map over the past two years.

According to a report by Mantaray Partners, a UK-based headhunter, the UK dominated the more esoteric deals, but the French, Italian, Spanish, Dutch and Portuguese markets have also been active.

They are expected to see an increase in residential mortgage-backed securities (RMBS), commercial mortgage-backed securities as well as collateralised loan obligations over the year. Activity in Eastern European and Latin American ABS markets is also expected to pick up, and larger houses are looking for individuals with expertise in these markets.

Rood says: 'Asset-backed securities are fairly new in Europe and investors and issuers are beginning to embrace them. While the bulge brackets are upgrading or making replacements, the second-tier European and North American institutions are taking advantage of the climate and actively looking to acquire the skills they could not afford.

Banks are willing to pay and retain their key people because the market is new and there are a finite number of qualified people.'

One headhunter adds: 'Bulge-bracket firms will continue to hire selectively to maintain their league table status, but we are seeing the mid-tier firms, such as Dresdner Kleinwort Wasserstein, ABN Amro, West LB, BNP Paribas and Société Générale, building their teams.

One of the problems is that, while there are more people on the market, there are not that many highly qualified people out there with years of experience behind them. Many people are holding on to their seats, especially at high-profile firms, and they will not leave unless they are going to be well compensated.'

Those most in demand are the seasoned veterans, especially in the credit derivative origination and distribution field. Rood says: 'Firms are looking for a track record. They want people with at least four or five years of experience, so that they can come in, hit the ground running and add to the bottom line quickly.'

Shaun Springer, chief executive of Napier Scott, says firms are more demanding when hiring on the sales side. They must know their product inside out. A winning personality and strong relationships are no longer enough.

He says: 'Firms have created the position of product specialists, who often come from a structured background. This is because clients do not only want information, but solutions, and want to work with people who understand both the product and the structure.'

Clare Harris of Longbridge International, a search firm, adds: 'Clients want much more product understanding. They want someone who can add value and not be a generalist.

Languages have also become increasingly important, especially as more deals are being done on the Continent. The sales function is being split along geographical lines and it is becoming imperative for a salesperson selling into France and Germany to speak the language.'