Latin Finance - July 2008 - (Page 18)

compensation survey Flat is the New Up by James Crombie n established global money centers, this is no time to be an investment banker. But in emerging markets, particularly Brazil, compensation is underpinned by robust fundamentals for employees. The second annual compensation survey by LatinFinance in association with global recruitment firm Options Group shows how hostile external conditions are taking their toll. But the news is not all bad, especially in relative terms. “Most people can expect to be down, but Brazil will probably be the outperformer,” says Paul DeLucia, managing partner at Options Group. “If you’re flat to last year, that’s the new up.” He adds that overall, LatAm compensation will be lower by 5%-10%, not bad versus pay in global markets, which is set for a 20%-30% decline. DeLucia predicts more layoffs ahead at global investment banks, with deeper cuts to be made as large institutions shrink uncompetitive businesses and reallocate to areas of high growth potential. LatAm ECM payouts are projected to be down 15%-25% this year, following a 30%-35% leap in 2007, according to Options Group. Directors and MD salaries will likely fall 15%-20%, while staff at the analyst to VP level are seen shedding 20%-25%, pending a second half performance as good as the first. Meanwhile, DCM bankers will lose 10%15% on average, giving up much of the 20%-25% rise seen in the 2006-2007 cycle. (See Charts.) “I don’t think there’s anyone expecting a bigger bonus in 2008 than they saw in 2007, except probably some people in Brazil who are seeing that they have not been subject to the turmoil, because of the underpinnings of the I LatAm investment bank pay may drop slightly this year, but the region’s financiers should fare much better than those in developed markets. Some could even get a pay rise. The Brazil party rages on: traders can expect a big payday economy,” says De Lucia. “This is maybe the last year they are as bullet proof because going into 2009, there’s so much uncertainty in the markets,” he adds. The bright spots are M&A, equity sales and trading, as well as equity research – which should be relatively flat, or in some cases higher. In Brazil, there will be a differential for more highly compensated specialized skills, including structuring products for specific investor bases, says Options Group. In LatAm in general, one headhunter notes there’s a strong bid for associate- level bankers, salespeople and traders. The New York-based recruiter expects the upcoming hiring season to be characterized by a bigger interest in junior-level personnel with experience in specific product lines. “Lots of MDs have told me to keep an eye out for good associates,” says the source, who asked not to be identified. Off the Boil Investment banks coming in relatively late to the game like Merrill Lynch and Morgan Stanley hired big in the first 18 LATINFINANCE July/August 2008

Table of Contents Feed for the Digital Edition of Latin Finance - July 2008

Latin Finance - July 2008 Contents Investment Banking Outlook Compensation Survey Colombia Investment Banking Borrowers vs. Investors Banorte Profile Braskem Financing Strategy Brazil Hydro Finance Peru Port Privatization Panama Money Flows Argentina Local Markets Guide to Banking Technology Who Said That?

Latin Finance - July 2008

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