Investment banks are sending fewer employees on international assignments, but those who do go are still getting full relocation packages, industry experts say.
"I have seen quite a few banks cut back on the number of people they were sending on assignment. But the extent of the reductions is still less than one might have expected," says Geoff Latta, executive vice president of ORC Worldwide, a New York-based relocation consulting firm. "Even the number of assignees within the former Merrill Lynch group that was acquired by Bank of America hasn't been cut back that much, and they still have quite a lot of people out on assignment."
Commercial and retail banks are limiting relocation benefits. Investment banks, on the other hand, "don't feel it's worth the time and effort to cut back" those benefits, Latta observes. That's because investment bankers are so highly paid that reimbursements for moving and cost of living expenses abroad make up a relatively small component of total compensation - "a little footnote to the rest of the package," he explains.
Those employers who did shave relocation benefits due to the recession are starting to express second thoughts, says Alain Verstandig, president of Net Expat, an Atlanta relocation consulting firm.
"Packages were shrinking but now corporations need to send people internationally and they're pumping up packages again," he says. "Now that the economy is catching up again, there are more opportunities than candidates ready to move, so we see corporations in financial services coming back to us and saying, 'Maybe we went one step too far and we need to be sexy again."
Government efforts to rein in bonuses also figure in banks' calculations. While both the U.S. and EU have adopted various rules limiting compensation, the restrictions say nothing about expat packages.
Over the past few years, financial services international relocation packages have evolved toward keeping the transferee whole rather than providing a financial windfall, says Scott Sullivan, executive vice president of Brookfield Global Relocation Services, Woodridge, Ill.
A recent Brookfield survey of investment banks found not only fewer relocations, but cases where expatriates were recalled. "A lot of people on assignment for financial service companies were given an ultimatum when things got critical: Either repatriate to no job, or stay out on assignment, but they were going to be localized and have the potential of losing their job," Sullivan says.
Localized in this case means shifted to "local" or "local plus" pay, a package that typically includes some housing assistance, education for children and a trip home. Verstandig says about half of local plus packages also include career assistance for a trailing spouse.
Local plus packages are popular in the United Arab Emirates, Hong Kong and countries where salaries are high and tax rates are low. It works well when the transferee is moving from a home country to a similar destination country, say Finland to Sweden, he says.