Russian banks' bonuses lure western bankers

Western investment banks in Moscow are losing their top talent to Russian banks which promise bigger bonuses and perks such as paid-for apartments and school fees, and recruiters say stunted bonus structures could be to blame.

The Times quotes one Moscow banker who says Russian firms are offering "crazy packages." Others say guaranteed bonuses of $6 million a year are being seen, and that even relatively junior bankers can hope for bonuses of up to $800,000 (420,000).

Hans Jochum Horn, the chief operating officer of Russian bank Renaissance Capital told the Times,"We're very market-orientated. If we want to win top talent, we're willing to pay what the market demands. Western firms are often constricted by it being difficult for them to go over fixed bonus brackets of, say, $1 million or $2 million, without seeking approval right at the top of the bank. We don't have that problem."

Merrill Lynch, Citigroup, Credit Suisse, ABN Amro, BNP Paribas and Dresdner Kleinwort have all experienced leakages. This comes at a time when Dresdner, whose profits were down last year, has cut bonuses worldwide, according to the Times.

"The problem with Western banks is that, while they sometimes have generous fixed compensation, the bonus system is rather stable. It doesn't matter if you had a great or a bad year, the bonus is similar," says Elena Birenberg, a consultant at the Moscow headhunter Pynes & Moerner. "Local banks, like Renaissance Capital, MDM Bank or Troika Dialog, are known for paying generous bonuses, or a percentage of the commission that you generate, so you can participate much more in the profit you are generating."