Salary survey: Good times for junior corporate financiers
Pay for analysts and associates in corporate finance is rising as banks seek to poach juniors from elsewhere, as well as retaining those they already have.
Andrew Morland, a consultant at EM Finance, a recruitment firm, said a survey of last year's corporate finance bonuses in London, based on conversations with 500 candidates and line managers, showed second year analysts with two years' banking experience received salaries in the region of 38,000 to 44,000 (€67,000 to €78,000) plus a bonus of 12,000 to 19,000.
Third year analysts received 43,000 to 49,000, plus a bonus of 20,000 to 35,000.
Analysts' bonuses are typically paid in July. Depending upon market conditions, Morland said they could be as much as 30% higher this year than last: 'The hike will be greatest for second and third year analysts who have enough experience to make a real contribution to their team.'
Morland said upwards pressure on analysts' pay is already manifesting itself in the form of sign-on bonuses. Last year, analysts were rarely paid bonuses at the time of joining. This year, he said analysts moving from one firm to another are receiving average sign-on bonuses of 5,000 to 8,000.
He said first year associates are also receiving substantially higher signing on bonuses, of up to 11,000. This is in addition to first year associates' salaries of 52,000 to 55,000, plus bonuses of 25,000 to 35,000.
Figures from Thomson Financial, the information provider, suggest European mergers and acquisition (M&A) activity faltered in April, with the value of deals falling 50% compared to the previous year. However optimistic banks have been recruiting at junior levels in anticipation of stronger activity to come.
Andrew Chancellor, managing director of the financial and professional services division at Robert Walters, a recruitment firm, said banks are hiring across the board for analyst and associate level corporate finance positions. He said a shortage of experienced associates means staff are being hired from outside the industry: 'In the past few months banks have again started hiring associates with legal, strategy consulting, or accounting backgrounds. This last happened two years' ago.'
A pay survey by Robert Walters puts maximum salaries for corporate finance analysts at 50,000 and maximum salaries for associates at 70,000. Chancellor said bonuses in the sector remained flat in 2003, but are likely to rise in 2004 on the back of hiring activity.
Banks are also making moves to retain the junior staff they have already. Last week it emerged that CSFB has begun offering associates guaranteed minimum pay packages. It is understood that the scheme will apply to all areas of the bank and will extend to Europe. Under it, first year associates are being offered at least 111,000 ($200,000); second year associates are being offered at least 139,000 ($250,000); third year associates are being offered a minimum of 166,000 ($300,000).
The guaranteed minimums are being accompanied by one-off stock awards of $45,000 for associates and $50,000 for vice presidents. The stock will vest over three years.
At the height of the last boom, Donaldson, Lufkin and Jenrette, a bank acquired by CSFB in 2000, guaranteed associates $300,000 in their first year and $400,000 in their second year.
Recruiters say the latest guarantees are unlikely to push associates' pay higher than it is already. John Axworthy at Virtual IB said CSFB's figures are not unreasonable: 'They are in line with market rates. This is just firming up existing market levels.'
