U.S. banks have increased pay and bonuses for top bankers in Hong Kong by as much as 50% as they look to retain their best performers amid a talent shortage.
Banking and headhunter sources say that Goldman Sachs led the way this year by rewarding its top-performing senior corporate financiers with a 40% to 50% increase in total compensation compared with a year ago.
“Relative to last year, Goldman has moved the needle more than any other bank in Hong Kong,” said one headhunter. “There is a war on talent in M&A”.
A banking source said Goldman’s sharp increase in pay has brought it on a par with some of Morgan Stanley’s best paid bankers, and comes after the bank increased pay globally for associates.
“A rule of thumb would be that last year a top performer in M&A at Goldman may have earned total comp of $1.2m, compared with $1.5m at Morgan Stanley. This year, they’ll earn $2m at both firms,” said one headhunter in Hong Kong.
There is a big discrepancy in the way banks are rewarding average and top performers. For example, average pay in investment banking was up around 10% to 15% at some firms, with raises skewed in favour of more junior staff. “Unless you’re a top-performer, MD pay is flat at many US firms,” the headhunter said. “But no-one’s outrageously disappointed.”
Banks have been paying to retain their best talent, particularly in equity capital markets and mergers and acquisitions, where there is a lack of senior talent. Covid restrictions have made it difficult to attract rainmakers to Hong Kong, and the result is a dearth of talent, bankers say.
Banks are increasing pay to bolster their defences. One source said Standard Chartered has “bent over backwards” to reward staff because it lost senior bankers last year following an ‘average bonus round’, with M&A banker Axel Grainger heading to UBS and Kunal Ahuja joining Barclays in Singapore.
Joe Parker, lead consultant corporate and investment banking at Selby Jennings, writing in the firm’s 2022 outlook report, said that the war for talent meant that “banks were more willing to pay sign-on bonuses, buy out notice periods, or offer verbal guarantees on bonuses being paid out. For many this number looks high in 2022 – retention will be key and so bonuses for highly skilled bankers are likely to increase up to 50% compared to last year,”
The higher bonuses are a reflection of a broader boost to pay, particularly among junior bankers. According to Selby Jennings, associates at tier one banks will earn a base salary up to HK$1.7m ($218k) excluding bonus, while vice presidents will be paid up to HK$2.2m in 2022.
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