It pays to be a corporate broker

Corporate broking, that peculiarly UK phenomenon, is providing plenty of job opportunities. Headhunters say the rush of hiring is leading to rising pay packages.

Guy Davies, managing director of Hogarth, Davies Lloyd, a search firm, said: 'Corporate broking is very hot at the moment. Pay has been bid up and long guarantees are on offer to encourage people to stay with new employers.

'Corporate broking is not a business that can be built overnight. It takes two or three years.'

Headhunters said total pay for senior corporate brokers with strong relationships is often as high as $1m. Paul Baker, the former co-head of corporate broking at Merrill Lynch who joined Morgan Stanley in May, is rumoured to have moved for a guarantee of $2m a year over two years. Morgan Stanley declined to comment.

Rising pay is tied to restricted supply as well as higher demand. Hugo Eddis, a headhunter at Whitehead Mann, said the increased recruitment comes after a two-year period of job losses in the business.

In April, Morgan Stanley built a new team of 13 corporate brokers in just four weeks. Seven came from Merrill Lynch, two from Credit Suisse First Boston, two from UBS, and two were moved internally.

Merrill lost two of its corporate brokers to Goldman Sachs in the same month. It then hired Chris Snoxall, formerly of Morgan Stanley, as well as poaching a broker from UBS. UBS then bolstered its operation by appointing Jim Renwick, head of European equity capital markets, as chairman of its corporate broking team.

For a sector founded on discrete long-term relationships, the clamour for staff looks a bit out of character. Citigroup hired three members of CSFB's corporate broking team in 2002, and has been quietly hiring since, but corporate broking rarely makes ripples, let alone a big splash.

Corporate broking is an unfamiliar concept for bankers outside the UK. Companies listed on the London Stock Exchange typically engage a corporate broker on a permanent basis to provide advice on market conditions and the performance of their stock. A corporate broker might, for example, give clients an insight into why the price of their stock is rising, as well as advising on when would be best to issue new shares.

Elsewhere in Europe, the role of corporate broker either does not exist, or is bound up in the corporate finance function.

Banks' recent eagerness to leap into corporate broking is due to attempts to strengthen their foothold in the UK corporate finance market. Charlie Foreman, co-head of corporate broking at Deutsche Bank, who was himself rumoured to be moving to Morgan Stanley at one point in April, said corporate broking has become more high profile as relationships have become more important:

'People have grasped that corporate broking leads to brokers retaining very strong relationships with UK corporates, which may lead to initial public offering and mergers and acquisitions mandates.'

Demand is strongest for senior brokers who can bring relationships with them, but there is a need for juniors too. Citigroup advertised a few weeks ago for an analyst to join its corporate broking team. The bank's advertisement specified two years equity capital markets or corporate finance experience.

Eddis said corporate brokers need an unusual combination of skills: 'They operate in an unusual space, in that they have responsibility for relationship building and management, as well as for generating transaction revenue.'