M&A bonuses slump

The dire state of corporate finance is reflected in a pay survey which shows bonuses of London-based directors slumped to an average of 57% last year from 86% in 2001.

Bonuses of corporate finance managers fell to 4% from 42%, the survey of medium-sized and small firms by the Monks consultancy showed, although assistant directors managed a small increase.

Redundancies have reduced many corporate finance teams by more than half in the past three years and last month UBS and Citigroup announced further cuts. Headhunters say more layoffs could be on the way, despite signs of an upturn in mergers and acquisitions activity this year.

Chris Haynes of Alexander Mann Executive Search, says: "More activity doesn't necessarily mean more hiring at this stage. There is a degree of optimism about next year but no one is jumping up and cheering."

The UK's Centre for Economics and Business Research said last month that corporate finance staff levels in London were likely to grow 4% next year, after falling a total of 20% this year and last.

Haynes says most banks have sufficient staff at analyst, associate and vice-president level. "However, there is always interest in originators if they had excellent contacts," he says.

Kathryn Ward, principal of Alexander Mann's office in Frankfurt, says legal obstacles to lay-offs in Germany had prevented banks from cutting staff numbers as fast as they wanted to. "There could be another one-and-a-half rounds of redundancies to go. The cycle is a bit behind London," she says.

However, there are also signs in Germany that deal activity might pick up, particularly in financial institutions group work and property-related deals.

Ward says banks are pitching for work, although with a far lower success rate than three years ago.

She says senior corporate financiers who had been laid off were finding work in Germany as consultants. Otherwise there was little demand, except for originators who also have transactional knowledge.