Hoare Govett tries to keep staff with 25k interim bonus

Hoare Govett, the corporate broking arm of ABN Amro, is paying its associates an interim bonus of 25,000 (€38,000) each as part of a strategy to retain staff.

The bank is offering the one-off packages to reward about 10 of its staff who are below director level, following poaching raids by rivals.

Last month, Hoare Govett lost Andrew Osborne, a director, and Mark Astaire, a managing director, to Merrill Lynch.

The decision to pay associates the interim fee, which is independent of any full-year bonus, was taken after Hoare Govett persuaded one associate, who was bound for Merrill Lynch, to stay.

A senior executive of Hoare Govett said: 'We have had a strong first half and staff at the lower levels have worked very hard. We have reflected that with these interim bonuses.' He described the suggestion that the payments were part of a plan to retain staff as 'wide of the mark'.

A spokesman for ABN Amro said the bank refused to comment on any individual's compensation.

Hoare Govett, whose chief executive is Nigel Mills, is understood to have offered the Merrill-bound associate a bonus of up to 100,000 - treble what he received last year. Others have claimed Hoare Govett said in a company-wide meeting that it would be increasing the bonus pool by two thirds this year.

One source said: 'Some associates feel they do not have the chance to progress in Hoare Govett, while others are receiving offers from elsewhere. These rewards are overdue.'

Hoare Govett has been a target for rivals seeking to build their presence in UK corporate broking.

It is the fourth-largest broker in the UK with 25 FTSE 100 clients.

Aside from the departures to Merrill, it is understood that some of the broker's managing directors were in favour of engineering a wholesale defection to JP Morgan, which is also seeking to bolster its broking team. One senior corporate broker at a rival firm said: 'Merrill Lynch and Morgan Stanley are both paying guaranteed bonuses to poach people. There has never been a better opportunity for people to join a US investment bank.'

However, any sale would have to be approved by ABN Amro, which is unwilling to part with Hoare Govett because its broking client list generates much of ABN Amro's UK equities revenues.