Western investment banks in Moscow are losing top talent to Russian competitors, who promise bigger bonuses and perks such as paid apartments and school fees. Recruiters say stunted bonus structures could be to blame.
The Times of London quotes one Moscow banker as saying 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.
Hans Jochum Horn, chief operating officer of the Russian bank Renaissance Capital, told the Times,"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 lost talent. This comes as Dresdner, whose profits were down last year, has cut bonuses worldwide, the newspaper says.
"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," observes 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."