News & Media ~ Latest Correlate News
Bank bonuses head back towards 2007 levels - 25 January, 2010
Bank bonuses head back towards 2007 levels - (FX Week)
LONDON & NEW YORK – Bonuses at JP Morgan were the best among banks reporting in so far, according to market sources.
At JP Morgan, staff compensation figures totaled $26.9 billion, an 18% increase from 2008. Investment bankers received $9.3 billion in salary, including bonuses, a 21% increase from 2008.
Meanwhile, at Morgan Stanley staff compensation figures amounted to $14.4 billion, a 31% increase from 2008. However, one New York-based headhunter said: "The word from Morgan Stanley is that there were a lot of tight-lipped, pale faces. Total compensation was still down from 2007."
At Citi, staff compensation figures totaled $24.9 billion, a 20% increase from 2008.
Market sources speculate that UK bonuses of up to £65,000 will be paid in cash. For bonuses from £65,000–365,000, 25% will be paid in stock vesting in the next four years in equal tranches, 37.5% in cash in the next monthly payslip and 37.5% in 'rights for shares', vesting at the beginning of April to avoid the 50% higher tax rate.
For bonuses from £365,000–500,000, 30% will be paid in stock vesting in the next four years in equal tranches, 35% in cash in the next monthly payslip, and 37.5% in rights for shares. For bonuses from £500,000–750,000, 40% will be paid in stock vesting in the next four years in equal tranches, 30% in cash in the next monthly payslip and 30% in rights for shares. Lastly, for bonuses from £750,000–1 million, 50% will be paid in stock vesting in the next four years in equal tranches, 25% in cash in the next monthly payslip and 25% in rights for shares.
Simon Head, head of fixed income at Correlate Search in London, said on the whole there has been a move back towards 2007 bonus levels – "not necessarily as a result of banks hitting 2009 budgets in foreign exchange, but more a function of the need to retain talent in anticipation of better markets".
JP Morgan, Morgan Stanley and Citi declined to comment
Demand for salespeople continues at major banks - Banks still hiring in FX sales - Head re-joins Correlate - 11 January, 2010
Simon Head re-joined Correlate Search, formerly known as Alexander Mann Financial Markets, as head of fixed income and foreign exchange executive search on December 7. Head remains in London and reports locally to Simon Vaughan-Edwards and Gavin Bonnet, managing directors at Correlate. He originally joined Alexander Mann in July 1998 and worked there until July 2007, latterly as head of foreign exchange executive search. He re-joins from Omerta, where he covered foreign exchange and emerging markets from July 2007 to October 2009
This article first appeared in FX Week:
LONDON - Salespeople continued to be in high demand last year, according to a headcount survey by recruitment firm Correlate Search.
A 2009 study of 250 people moves across the FX industry showed 63% were in European FX sales. This is a consistent increase from 61% in 2008 - figures obtained from a 2008 study of 250 people moves across the FX industry - and shows the drive towards client-led revenue, said Simon Head, head of fixed income at Correlate Search in London.
In particular, 2009 saw more demand for UK and Pan-European institutions sales, accounting for 45% of all moves, a big increase from 37% in 2008. Head attributes this to an increased need for more flow products and wider spreads, following lower demand for structured products.
Demand for hedge fund salespeople remained consistent at 17% compared with 16% in 2008, with a significant increase in moves towards the end of 2009, as evidenced by hires at Morgan Stanley, Bank of America Merrill Lynch, JP Morgan and Nomura. However, corporate sales took a beating, falling to just 7% of all sales moves in 2009 from 18% in 2008 and 37% in 2006. (2006 figures obtained from The Akamai FX Talent transfer study of 368 people moves across 60 institutions.)
Traders are also still in demand, accounting for 31% of all FX moves in 2009, a substantial increase from 24% in 2006 and holding steady from 30% in 2008. Head explained that this reflects an increase in demand for risk management since 2008.
However, this has caused a slight reduction in the volume of FX strategy moves, down to 4% in 2008 and 2009 from 7% in 2006. Nevertheless, the few moves that have taken place have been high-profile, including Jim McCormick moving to Citi from Nomura to join its European FX research team in London, replacing Stephen Hull who left to co-head Morgan Stanley's global foreign exchange strategy.
Proprietary trading saw the biggest increase in 2009 trading moves, up from 4% in 2008 to 19% in 2009. Spot moves held steady at 34% in 2009, from 35% in 2008, a sharp jump from 28% in 2006. Meanwhile, forwards also showed a substantial increase from 2% of trading moves in 2008 to 9% in 2009.Percentage of people moves
2006 2008 2009
European FX sales 62 61 63
Trading 24 30 31
Proprietary trading N/A 4 19
Spot trading 28 34 35
Forwards trading 5 2 9
FX strategy 7 4 4
FX structuring 7 5 4
UK & pan-Europe
institutional sales N/A 37 45
UK & pan-Europe
corporate institutional
sales 37 18 7
Hedge fund sales N/A 16 17
Lloyds TSB reveals HBOS takeover - 18 September, 2008
This article first appeared in The Grapevine Online:
It has been one headline after another for the Financial Services sector this week, as Lloyds TSB announces a £12 billion takeover deal for troubled rival HBOS.
The deal has government backing, overriding any concerns that it may reduce competition in the banking industry. Fears for HBOS have been growing over the past few days as its share prices plummeted and it is thought the government approved the takeover in order to avoid the prospective of another Northern Rock crisis.
It is a great opportunity for Lloyds, says Gavin Bonnet, Managing Director UK, Akamai Financial Markets. "It's a transaction that obviously couldn't have happened previously in a different economic climate because of the implications for the monopolies and mergers commissions," he comments. "But it has been allowed to go ahead now because of the distressed nature of the bank involved."
However, the speed at which banks are now being acquired makes it difficult to judge just what the effects will be. "There's so much uncertainty and the pace at which these transactions are conducted prevents anyone from really understanding where the potential risks lie in making such hasty decisions," remarks Bonnet.
"Of course, what's happening at the moment is that everybody in some of the governance functions is being harangued on a daily basis by the regulators trying to establish their exposure to Lehmans and the other banking disasters," he continues. "They're all concerned about the potential for some sort of systematic risk failure and that domino effect that we've always been afraid of."
EG 18/09/2008
What next for financial services headhunters? - 18 September, 2008
This article first appeared in The Grapevine Online:
As the financial services sector implodes and more job losses are announced every day, specialist recruiters are wondering how far the damage will spread. While the cream of Lehman Brothers' crop of employees is skimmed off by the bank's former rivals, the remainder will suffer from drastically reduced hiring levels in the City. Shaun Springer, CEO, Napier Scott, believes that the outlook for employees is bleak: "Banks are cherrypicking as they have the right to do in today's climate, but any hiring they're doing is very strategic. I would guess that only 20% of Lehman's front office staff will get reemployed this year."
This is bound to have an effect on headhunters for the industry. Gavin Bonnet, Managing Director UK, Akamai Financial Markets, comments: "The client bases have consolidated and shrunk. There are basically far too many recruiters chasing too little business and the same thing will happen that is already occurring in the FS sector itself. There'll possibly be a consolidation within the recruitment industry and there'll be a number that will go to the wall."
The problem is that Lehmans is not alone. The Bank of America's acquisition of Merrill Lynch, the sale of Dresdner Bank to Commerzbank, the potential merger between Wachovia and Morgan Stanley and, to a lesser extent, today's deal between Lloyds TSB and HBOS will all release a growing stream of unemployed workers into the labour market at a time when companies are cutting back on hiring.
Springer believes things will get worse before they get better: "I suspect 2009 will be harder than 2008 and I've been saying that since last year. This is just going to get worse and worse until somebody decides to put a stop to it and that somebody has to be the regulatory bodies. They have let this crisis happen through inaction and now they're exacerbating it by the same. Short selling [borrowing something you don't have so you can sell it for more than you'd have to pay for it when you pay it back later] is the cancer of our capital markets."
EG 18/09/2008
Guest Comment: Banks are hiring in risk, but recruitment's not enough - 08 September, 2008
This article appeared in eFinancialCareers, 'Jobs, News and Views'
Never has the cost of lax risk control been more stark. From $7.1bn of losses at SocGen to huge writedowns at the likes of UBS and Merrill Lynch, banks have learnt the hard way what it means not to keep a firm grip on their employees and businesses.
As a result, we are seeing strong growth in compliance roles with a 'monitoring' element to them, for example trade survelliance and monitoring and risk assessment and monitoring. But is it simply enough to plug in people with the requisite systems skills, product knowledge, regulatory rule book knowledge? Are there still endemic problems of corporate structure, governance, bureaucracy, silo's, culture etc? And as such, are these appointments really there to do little more than pay lip service to the notion of tighter risk controls.
Image has been replaced by reality. UBS had a strong image for risk control, but that image has proven little more than a mirage. At the same time, a large number of dissatisfied compliance and risk management professionals are emerging. Making change happen is a tough thing in large organisations, and as a consequence a lot of the talent is moving to smaller organisations where they feel they can genuinely make a difference.
Many institutions are behind the curve. Most of these control functions should not be viewed as a one time project, but as a changing and everevolving discipline that develops with the dynamics of a changing risk landscape.
Unquestionably risks faced by institutions are more and more complicated be it financial markets risk, credit risk, people risk, reputational risk, etc. etc. Too many institutions still have a fragmented approach to risk management, with too many silo's and with too little responsibility. The convergence of a number of control functions into more holistic / helicopter view of risk evaluation still has to happen.
In the meantime, we still have a 'tick & bash' control environment. So much for principles based regulation designed to "stimulate innovation and flexibility".
Gavin Bonnet is executive director, head of EMEA Business Management & Controls at Correlate Search.
African Capital Markets - 20 August, 2008
The announcement by Stephen Jennings, CEO of Renaissance Capital, in January 2007 that his firm was setting up operations in Africa with an upfront investment of $500m was a landmark moment in that it signalled the continent's attractiveness as a home for investment dollars to the developed markets in Europe and North America as well as the cash-rich sovereign investors in Asia and the Middle East.
"Pretty much every major investor either has, or is looking at, developing an Africa strategy".
With returns often outstripping those in other emerging markets, Jennings optimism seems justified as investors and investment banks flock to Africa in increasing numbers. The Nigerian Stock Exchange (NSE) All Share Index grew by 74% between 2006 and 2007 while Ghana had the best performing stock market in the world in the 12 months from June 2007 with 46% growth. In the same time period, the S&P Africa Frontier Index rose by 27%. The message is simple: for the savvy investor – hedge fund, private equity fund, long only manager, sovereign wealth fund or High Net Worth Individual – there is significant value to be gained from exposure to this "frontier" market.
Whilst the upward spiral in global commodity prices is a major contributory factor behind Africa's growth story it is not the sole catalyst. Kenya, for example, has been experiencing 6 – 7% GDP growth despite its not being an exporter of any of the precious commodities. With a few obvious exceptions (Sudan, Zimbabwe), the last decade has witnessed a period of increased political stability coupled with better governance in most of Africa. This has provided a disciplined regulatory framework that encourages greater investment in private sector enterprise as evidenced by the steady stream of IPOs and private placements in Africa's larger economies. The share of GDP attributed to the private sector continues to grow and with it, a growing middle class of consumers boosting domestic enterprise in a virtuous circle of wealth creation.
Investors looking for exposure to African risk now have a wider variety of strategies available to them: from private equity and principal investing through to investing in infrastructure projects in addition to the traditional investments in commodity businesses and projects (oil & gas, mining etc.). With thriving stock exchanges all over the continent and governments friendly to foreign ownership, investors can also invest in listed stocks with liquidity constraints somewhat lower than the popular perception.
Investment banks are profiting from the upsurge in fundraising and advisory mandates for M&A transactions, IPOs and private placements (Morgan Stanley executed 12 IPOs in Africa raising more than $3bn in the 12 months to June), debt, infrastructure and project financings. Trade finance continues to flourish and the increasing cross-border activity has rewarded providers of currency trading, currency hedging and other treasury services. Last year, Citigroup won the mandate for Ghana's debut $750m Eurobond (co-lead with UBS) while BNP Paribas was recently selected for a $750m bond issue by the NNPC & Nigerian LNG.
As with all emerging markets, investing in Africa comes with its own unique risks – irrespective of the increasingly investor-friendly climate, due diligence supported by local knowledge is still key. As ever in investment banking and investment management, human talent is a vital part of the equation. The African capital markets are growing at a phenomenal pace, indeed too great a pace for the domestic skill base to keep up with. Repeating trends seen in previous emerging markets, there is significant demand for expatriate talent as well as for repatriating Africans from the large Diaspora (the UK alone is home to an estimated 1.5m Nigerians). To address the African market, most banks and investment firms have staffed the top echelons of their African businesses with a mix of expatriate veterans of other emerging markets and repatriating African bankers with the right political connections as well as an appreciation for local culture and business customs.
Finding the right individuals presents a significant challenge for existing market players and new entrants alike. Whether locating personnel in established financial centres – London, New York, Dubai – or “on the ground” – Accra, Johannesburg, Lagos, Luanda, Nairobi – finding and attracting individuals with the right mix of skills and experience is far from straightforward. Not only do firms have to assess the relevant experience and technical expertise of candidates, other attributes such as temperament, resourcefulness and diplomacy come into play. Trips to major African cities come with all sorts of unexpected surprises (spending time in an airport police cell for not having the correct documentation is an example that springs to mind) for even the most seasoned business traveller thus the ability to think on their feet is a prerequisite. Where the roles involve relocating to an African country, things get even more complicated with special provisions often necessary for medical, housing and security matters - especially for candidates with young families.
Yet, these are not insurmountable obstacles as evidenced by a number of recent high profile moves.
- Earlier this year Alex von Sponeck, previously Head of Debt Capital Markets for CEEMEA at Merrill Lynch joined Goldman Sachs along with two other members of his team.
- Tutu Agyare left his position as Global Head of Emerging Markets at UBS to start up a Hedge Fund focussed purely on African investments.
- Peter Enti resigned from Standard Chartered Bank where he ran FX Trading for Africa to join Agyare as a partner in the new fund.
- Renaissance Capital has made a number of hires including Rotimi Oyekanmi - as Head of Private Equity in Nigeria – from African Capital Alliance; Terry Fenner-Leitao former CFO of Credit Suisse’s Global Markets Solutions Group as Chief of Staff for Africa; Ladell Robbins from JP Morgan in New York as Head of Corporate Finance for West Africa.
- Francis Wood, a veteran of Credit Suisse & Merrill Lynch joined First City Monument Bank in Lagos as Head of Investment Banking.
- Runa Alam resigned from Kingdom Zephyr Africa Management to co-found Development Partners International with Miles Morland.
The names mentioned above are just some of the high profile moves of late. Lower down the corporate ladder, there is plenty of hiring activity at the VP, Associate and Analyst levels as firms jostle for competitive advantage in this booming market. Partnering with recruitment firms that understand the continent and the complexities surrounding hiring is just one extra way to gain an edge over the competition.
The lights are being turned on right across the Dark Continent and opportunity abounds for the adventurous investor or banker. With a well thought out approach that shows respect for the laws and customs of the various countries, backed up by careful recruiting practises, working in Africa could prove very rewarding indeed.
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