Hiring, pay hotting up for junior corporate brokers

Michael Page City and Woodhamill are among the recruiters currently in pursuit of junior corporate brokers. Thomas Nalder, a consultant at Michael Page, says entry level staff are at a premium in the sector: "Banks didn't train enough junior brokers over the past few years. Now they're trying to make up for that: there are several opportunities."

Natalya Martchouk, a consultant at Woodhamill, says demand for juniors is on a high: "There's not a flood of demand because corporate broking is not an area that needs loads of people. But demand is definitely more than at any time in the last eight months."

It doesn't take a genius to work out the origins of at least some of this demand. Earlier this month Citigroup raided Hoare Govett, the broker owned by Dutch bank ABN Amro. It netted five senior brokers, but failed to extract any juniors. A further raid on the same team yielded two mid-ranking directors, but Hoare Govett's juniors remained firmly in place, allegedly persuaded by generous guaranteed bonuses.

Rivals say Citigroup is in urgent need of junior corporate broking talent. "Six months ago Citigroup had only one analyst supporting the whole corporate broking team," says the head of broking at one rival firm. "They now have three, but still need more."

Nalder says demand for junior brokers is widespread: it's not just growing US houses [like Citigroup, Merrill Lynch and Morgan Stanley] that are looking for junior staff, he says.

Higher profile, higher pay

Corporate broking is a peculiarly British phenomenon. Companies listed on the London Stock Exchange typically engage a corporate broker on a permanent basis to help them understand the vagaries of the stock market and the performance of their stock. As a result, brokers have valuable relationships with company directors.

In the past few years US banks like Morgan Stanley and Citigroup have strengthened their corporate broking functions in order to gain access to these relationships. If a company has a strong connection with a bank's broker, the hope is that it will ask that bank for help when it plans to merge with a rival or arrange a share issue, both of which command high fees.

Recruiters say brokers are being paid more for their role as the gatekeeper of corporate relationships. "Historically corporate brokers were paid 25% to 35% less than people sitting in corporate finance," says one. "They were seen a cost base that didn't generate fees. Because they couldn't put a monetary value on the relationships they had, they were often underpaid."

Pay for corporate brokers has been rising since Morgan Stanley poached a team from Merrill Lynch last year. Paul Baker, head of the team at Merrill was rumoured to have moved for a guarantee of $2m (1.1m) over two years.

As a result, the gap between pay in corporate broking, corporate finance and equity capital markets is now closing. Vice presidents in corporate broking can now expect to earn between 250,000 and 400,000, say recruiters. Nalder at Michael Page says associates can expect a salary of 55,000 to 70,000, plus a bonus of between 50% and 150%.