Investment bankers reap in bonus heaps

Investment bankers never had so good time. With the entry of Wall Street firms and a rush to lure talent, bankers are lapping up unheard of bonuses. Brokerages within the banking groups have been the biggest gainers, besides M&A advisory and structured finance divisions. A surge in stock volumes, increasing number of deals and a growing appetite for new financing structures are driving pay-outs in a segment that is scounging for talent.

Bonuses this time have been in the range of 100-300% of salaries in most well-known investment banks. Some of the bigger brokerages that have seen an increase of 50% in their top line also doled out hefty pay packages to their key employees. According to the market sources, one of the biggest bonuse payoffs went to a head of a foreign brokerage. The amount: over $3 million. The research head of the organisation also received an equally impressive bonus.

The secondary market has witnessed an impressive growth in trading volumes this year. On the Bombay Stock Exchange (BSE), total volume rose nearly 18% in F.Y.07. On the larger bourse National Stock Exchange (NSE), the turnover rose nearly 24%.

While bonuses may have surged, the numbers have widened between Indian banks and overseas players. Bonuses amongst the larger overseas players range between 175-300% while those for the bigger Indian outfits are lower at 125-175%. Some of the bigger Indian players like Kotak Mahindra are yet to announce their bonuses for the last year.

Some of the biggest paymasters include CLSA, Deutsche Bank, Barclays, Merill Lynch, Citi and UBS. Media sources further add that while Deutsche has given a bonus in the range of 250% to 300%, in the case of Merill Lynch, it has been 150% to 270%. JP Morgan has also rewarded most of its bankers with nearly 300%. ICICI Securities' bonus payout has been in the range of 100% to 175%. In the treasury side of business like forex, derivatives and structured financing (in areas like real estate), payoffs were fatter compared to past years, but the numbers are much smaller than those given on the brokerage and research side. While there has been a rise in the number of people who received bonuses of over $1 million, the sharpest rise has been in the range of between $0.5-1 million. The number of bankers who received bonuses in this range is said to have more than doubled. In order to attract talent, newer foreign players have paid hefty sign-on bonuses. In the recent past, players like Goldman Sachs, Lehmann and Credit Suisse have entered the Indian market.

Source : The Economic Times

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