Investment bankers set to profit most from 2006
A new report suggests investment bankers and equities professionals will see the biggest increases in their pay this year. However, the future looks less bountiful for fixed income bankers and fixed income fund managers.
The latest report from Wall Street Compensation specialists Johnson Associates, suggests investment banking types (read M&A bankers and corporate financiers) will see their pay rise 25% in 2006 on the back of increased deal activity.
Equities bankers are all set to see a rise of 20%, says the report. Fixed income bankers are on track for a more measly 5-10% increase, and fixed income fund managers can bank on a very negligible 5% rise (compared to 10-15% for their equities colleagues).
Soaring M&A activity is a virtually a given. But what of slumping world equity markets and reports of extravagant bonuses for commodities professionals, who are usually grouped in banks' fixed income divisions? Surely these will impact pay?
Andrew Rouse, vice president at Johnson Associates, says it's a tough call. "If the downward trend continues for a while, we may have to revise equities forecasts." Poor fixed income forecasts reflect the fact that fixed income markets and fixed income pay are coming off a high base, says Rouse: "There's inherently more upside to equities."
Isabel Martin, London-based European head of financial services recruitment at search firm Korn/Ferry International, dimisses the forecast. She says it's too early to call bonuses for 2006: "Don't forget 1998. After Russia defaulted in August everything went from euphoria to crash."
And as far as those poor fixed income fund managers are concerned, Chris Manfield, a fund management specialist at search firm the Whitney Group, says a paltry pay rise would merely leave them on a par with equities colleagues: "Fixed income fund managers are now paid around 5% more than equities fund managers. If their pay only rises 5% this year and equity managers see a 10% rise, it will merely help redress the difference."
