Latin Finance - July/August 2009 - 16

compensation survey Brazil Pay Bottoms by James Crombie slump in capital markets activity and industry consolidation are a significant drain on Brazilian investment banking compensation, which is down in line with global trends. But the third annual compensation survey by LatinFinance in association with global recruitment firm Options Group shows that the salary and bonus lows may have already been struck. “Comp reality has changed forever. The euphoria that we saw in 2006/2007 will not come back, at least for some time,” says Vinicius Bolotnicki, a São Paulo-based director at Options Group. “There are a lot of people in the market that need jobs and the market is not going to absorb these people in a year or in six months, it’s going to take a while,” he adds. Headcount has been hammered by the mergers of Bank of America and Merrill Lynch, Itaú Unibanco and ABN AMRO’s Brazil assets with Santander. Those investment bankers lucky enough to be still employed are besieged by diminished A Brazilian investment bank compensation may tumble this year, but recovery is in sight. Those institutions less impacted by crisis should still pay well. deal flow, and extended financial markets instability makes it harder to get clients to commit. But while Brazilian bonuses look set to decline 30%-50% versus last year in dollar terms, base salaries may stay the same or even increase at the houses that are in better shape globally. There is the expectation that bankers might return to the era of being paid like lawyers, with a hefty base salary and relatively small bonus. “The proportion of bonus and base salary is going to become a little more balanced,” says Bolotnicki. “Bonus is going to be lower in Brazil, but people are going to make bonus this year,” he adds. Bolotnicki divides the market into two groups. Strong firms like JPMorgan, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley, Itaú, Barclays and Santander should continue to pay, though commercial banks will still offer less. But bankers at more stressed institutions like Citi, BofA-Merrill Lynch, RBS, UBS, ING and others with lingering global problems are due for a reduction. While that may not look so bad in local currency – it has depreciated more than 30% from its 2008 peak of around 1.55 reais to the dollar – Brazilian financiers used to getting cash are now having to swallow up to 100% of the bonus in stock. To make matters worse, much will likely be deferred, vesting gradually over a number of years, typically three or more. Brazil M&A Compensation Down 40%-50% year-on-year AVERAGE Base Analyst 1st Year 2nd Year 3rd Year 1st Year 2nd Year 3rd Year VP Director MD Source: Options Group Intelligence Unit PREDICTED COMPENSATION RANGE Bonus $30,000-$40,000 $35,000-$45,000 $40,000-$50,000 $45,000-$55,000 $55,000-$65,000 $65,000-$85,000 $125,000-$175,000 $250,000-$350,000 $400,000-$600,000 From $40,000 $45,000 $55,000 $85,000 $110,000 $135,000 $250,000 $350,000 $500,000 To $95,000 $110,000 $125,000 $140,000 $175,000 $200,000 $375,000 $500,000 $850,000 $40,000-$50,000 $45,000-$55,000 $55,000-$65,000 $70,000 $75,000-$85,000 $90,000-$100,000 $125,000 $150,000 $200,000 Associate 16 LatinFinance July/August 2009

Latin Finance - July/August 2009

Table of Contents for the Digital Edition of Latin Finance - July/August 2009