Spring is on its way, bonuses are safely banked and bankers are free to fly the nest. So just which Wall Street firms are most likely to suffer an exodus of talent this season?
Ask recruiters that question and the same names crop up repeatedly: JP Morgan, Deutsche Bank and Credit Suisse First Boston (CSFB). 'We're already getting resumes from these banks and we expect a whole lot more,' says one Wall Street recruiter. 'People are not happy.'
Underpaid and Underappreciated
At some of the big universal banks, pay is the nub of the problem. 'Large banks with big retail operations have to be careful at bonus time,' says Marc Baranski, head of the global financial services practice at compensation specialist Sibson Consulting. 'Their corporate cultures tend to be uncomfortable with paying large investment banking bonuses.'
This may be why recruiters report grumbling at the likes of JP Morgan, Citigroup, and Bank of America. One says: 'Top bankers at Bank of America and Citigroup feel capped out at $2-$3 million.'
Recruiters are typically unwilling to name banks and potential staff departures on the record because they might lose potential -and actual - clients. Anonymously however, several point to JP Morgan as the universal bank whose staff are in the biggest hurry to leave. After guzzling Bank One in July, JP Morgan is engaged in a spot of cost cutting to the tune of $3 billion.
Couple this with a meagre 5% increase in operating profits in the investment banking division during 2004 versus a hefty 50% at Goldman Sachs, and you get bonuses on the south side of acceptable. 'JP Morgan was definitely the low man on the totem pole this time,' says a top pay consultant on Wall Street.
Just how low is low? JP Morgan isn't saying: the bank declines to comment on matters concerning compensation. But recruiters suggest a steep fall. 'At banks that did well, bonuses rose between 30% and 50%,' says Jacob Navon, a partner at search firm Westwood Partners, who also named no names. 'At banks that didn't do too well, they're down 30%.'
Senior bankers are said to have fared the worst, and JP Morgan has had several senior departures so far this year. In February it lost Anthony Ianno and Christopher Lowe, managing directors in its natural resources investment banking group; Dean Maki, a vice president of economic research; and Robert Beehler, managing director and head of European short-term fixed income.
Uncertain and Insecure
If some bankers are looking to move for higher pay, others fear the sky falling on their heads. 'We're looking to hire out of banks where there is restructuring and uncertainty about the future,' says Navon at Westwood Partners.
No prizes for guessing which these are.
'We're getting a lot of resumes out of Deutsche,' says one recruiter. 'People are feeling insecure. They don't know what's going on, and there are a lot of wild rumors. The bank is having a hard time making it clear that it's staying in business, and if so, which business.' Deutsche Bank is in the process of making 6,000 redundancies worldwide.
Restructuring is also ruffling feathers at CSFB, where recruiters say some bankers are getting impatient with the procession of new CEOs (Allen Wheat, John Mack and Brady Dougan in the space of a few years). Mack allies such as Michael Clark, global head of proprietary trading at the bank, and Jerry Wood, global co-head of fixed income, both announced their resignations in the past few weeks.
But the CEO of one Wall Street search firm reports healthy buy-in to Dougan's plan for simplifying CSFB's structure. 'CSFB's been a bit of an open floodgate, but it's slowing down,' he says. 'The people who couldn't deal with Dougan have gone already. Others are prepared to ride it out.'