Smaller bonuses, bigger base pay for risk managers
Some front office bankers look like getting bumper bonuses this year, but risk managers are trying to bolster their base salaries in anticipation of smaller variable compensation.
Hidden among statements about deferrals and stopping multi-year guarantees in the FSA's remuneration document is the suggestion that bonuses within risk and compliance functions shouldn't be linked to the performance of the business.
The motivation, of course, is to increase the objectivity of risk managers' decisions, but it also could mean that if the bank does well, they may be excluded from the bonus party.
Chris Page, head of reward services at KPMG, says risk bonuses are a relatively murky issue: "There's very little data around this as it's not subject to public scrutiny. But if, as looks likely, this is an exceptional year for top investment banks, then you can expect everyone to do comparatively well."
But recruiters say that risk managers are not particularly optimistic about bonus prospects for 2009, and are instead attempting to secure a bigger base salary when switching jobs.
"Candidates in the risk space are demanding fairly significant increases in base salary in anticipation of smaller bonuses," says Hannah Jeffery, manager, risk management and quantitative analytics at Robert Walters. "Those moving between roles are often asking for a 20-30% uplift, but banks are generally pushing this back to around 10%."
Specialist risk recruiters GRS Group found that salaries rose by 5% in the first six months of 2009, driven by lower bonus expectations.
Priya Mariannie, risk recruitment consultant at PSD Group, says some areas are more lucrative than others.
"There is a greater demand for credit risk managers, so candidates currently occupying senior positions are able to achieve base salary increases when moving to a new role. We anticipate that the credit risk function might achieve the largest percentile bonuses in risk management next year, as market risk roles have in previous years," she says.
