Risk pros see bonuses double

A new report suggests mid-ranking credit risk professionals with specialist skills have seen generous increases in their pay.

The report by executive search firm Sheffield Haworth suggests credit risk professionals who speak multiple European languages, specialise in hedge funds, or are au fait with the quantitative analysis of economic capital, can now earn bonuses that are twice as high as their less specialised colleagues.

Adrian Marples, associate director in Sheffield Haworth's risk management practice, says salary rises in credit risk have peaked at around 8% in the past 12 months. However, he says bonuses increases have been more substantial.

"Associate vice presidents in credit risk typically earned a basic salary of 60,000 to 65,000, with a bonus of 20% to 40%," says Marples. "This year we saw bonuses for top performers at between 50% and 80%."

Marples attributes the rise to a shortage of mid-ranking credit risk talent and the need to retain them. "In 2002 and 2003 a lot of junior risk people moved into the business and risk teams became very top heavy," he says. "When banks moved back into the market in 2003 and 2004 there weren't enough skilled candidates. This year they've paid higher bonuses to retain this scarce resource."

The Basel II capital requirements, which are due for implementation by 2007, are helping drive demand for quantitative credit risk specialists who can analyst banks' use of economic capital, says Marples. Hedge fund credit risk specialists and German, French and Italian speakers are equally sought after, with many having moved into the business in recent years. He says staff with these skills are more likely to earn bonuses at the top of the range.

With pay for credit risk specialists up, Marples says hiring in the sector is abnormally subdued: "At this time of the year people who are dissatisfied with their bonus usually leave and need to be replaced. But people seem to be quite happy and there is much less turnover than usual."