Bloomberg reports that compensation for investment bankers in Brazil is heating up in a big way, with pay hikes in the neighborhood of 25% for bankers ready to defect to rival firms.
And while the financial services industry continues to shink in such centers as London and New York, the opposite is true in Brazil. There’s actually a shortage of experienced investment banking talent in Latin America’s largest economy.
Brazil is showing a net increase in investment banking jobs in 2011. Salaries for managing director-level bankers ranged from around $350k to $500k, not including bonuses. This compares well with the average $300k to $400k at top U.S. banks. In fact, according to the Bloomberg article, average pay for bankers fell by roughly 27% last year, while it declined by only 1% in Latin America.
“The local debt and credit markets will be the next big thing,” (in Brazil), said Vinicius Bolotnicki, a partner at Options Group in Brazil. Foreign companies such as Deutsche Bank AG (DBK), JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC) and Goldman Sachs Group Inc. (GS) have been adding employees at their offices.
The biggest challenge for Brazilian banks will be to retain senior executives, says Bolotnicki, especially as fees decline from underwriting stocks and bonds and from advising on M&A.
Total revenue from investment banking fees in Brazil reached $891 million last year, according to data from Dealogic. That level is below 2010 levels of $1.16 billion and far off the peak of 2007, $1.6 billion. This means that senior executives may take the lion’s share of banks’ bonus pools, leaving mid-level professionals’ compensation essentially flat. Nevertheless, Brazilian banks still pay their bonuses in cash, something that’s especially attractive at a time when U.S. and European banks are being forced to defer larger chunks of executive compensation in shares of stock, and trim bonuses overall.
Bright spots on the Brazil scene include increasing demand for equity analysts and equity-derivative teams.
What’s your take? Are you investigating Brazil as either a place of doing business or for an investment bank job? Add your comments below.