Summer is coming to the City of London and Wall Street, but that won’t do much for investment bankers cosseted in air conditioned offices far from a decent beach. By contrast, Sydney bankers are spending the coming down-under winter reminiscing about surfing and lolling about on the city’s 37 beaches.
It’s a distinction worth noting. Not only is Sydney a good place to live (with stretches of world class sand and surf only 30 minutes away from the central business district), it also offers an increasing array of jobs for financial services professionals.
‘The banking market is very, very buoyant right now,’ says Michael Markiewicz, managing director of Carmichael Fisher, a Sydney and Melbourne-based executive search firm, ‘Banks are very keen to hire. Increasingly, Asia Pacific deals are being banked out of Australia.’
The sentiment is repeated by other Sydney banking recruiters: ‘The hiring shackles are coming off at US banks,’ reports Jon Michel, of the Jon Michel Executive Search Agency. James Nicholson, a director at Robert Walters in the city says hiring is up across all banking areas, from front office functions such as corporate finance, through to the middle and back office areas like risk management, accounting, and compliance.
One word provides a clue to the upsurge in Australian banking hiring: Telstra. Valued at a massive 14bn (AUS$33 billion, €20bn, US$26bn), the Australian government’s disposal of a 51.8% stake in the state owned telephone company will be the world’s largest equity sale if it takes place as expected in late 2006. Banks are understandably interested in laying their hands on some of the AUS$221 million in related fees.
But Australia is far from a one-trick pony. In April, Foster’s Group, the Australian brewer, said it would pay $2.5 billion for the wine maker Southcorp. Figures from Thomson Financial, the data provider, show the value of M&A deals with an Australian element rose 60% between 2003 and 2004, to US$107.3 billion, making the M&A market nearly twice as big as Germany.
Dealogic, another information provider shows Australian debt issues rising nearly 60% to US$111 billion last year; equity issues rose nearly 20% to US$24.5 billion.
Growth hasn’t gone unnoticed by financial services firms, which are both turning up and bulking up. For example, Tudor Investment Corporation, the US$10 billion hedge fund, is opening its first Australian office this year. Morgan Stanley Serco Solutions, an infrastructure arm of Morgan Stanley, opened an office in Sydney last October. Headcount across Morgan Stanley in Australia has risen from 48 to around 250 in the last five years.
Michel says Goldman Sachs JBWere, Credit Suisse First Boston and UBS are among the biggest hirers in Australia right now. Others, like JP Morgan are restructuring after hiring in Andrew Pridham, formerly of UBS, to run its Australian and New Zealand investment banking operations in 2003.
Australian banks are also in the market for new talent. In February, for example, National Australia Bank hired a new head of options in preparation for the relaunch of its foreign-exchange currency options trading after more than a year.
The surge of hiring is prompting some recruiters to try luring Australians back from overseas. Robert Walters runs a road show looking for Australian talent in London. Markiewicz has also been in the City scouting Ozzies who want to go home.
Some Australian transplants abroad are not quite ready to pack it up back to OZ, however. Tom Hogan, a derivatives trader at CSFB, says he won’t be hurrying back: ‘In London you’re in the middle of everything and the career prospects are better. The products here are probably more complex than in Sydney. Traders there will be dealing with advanced products, but not to the same level.’
Rich AND tanned
Hiring is having a predictable effect on pay, which is reputedly rising. Michel says the average package of an Australian banker has risen 20% over the past few years. Nicholson at Robert Walters says pay has risen most in areas of acute demand, like compliance and risk.
Markiewicz says associates working in M&A in Sydney now earn salary packages of between AUS$120,000 and $150,000, with the opportunity to earn $100,000 plus in bonus. Senior associates are on salaries $150,000 to $200,000, with bonus potential of 100%. Associate directors are on $210,000 to $250,000, earning one to two times that in bonus depending upon performance and deals concluded.
According to Robert Walters, a risk manager with between six and ten years’ experience can now earn a salary of AUS$120,000 to $200,000 in Sydney, plus a bonus. A similarly experienced financial accountant working in an investment bank can earn $90,000 to $130,000 plus a bonus.
Now for the bad news…
The bad news from the land of milk and honey is that although pay is up, packages are still lower than in the City of London and Wall Street. Markiewicz reckons they can be down 30%, or more. ‘Deals in London and New York are bigger and so, therefore, is pay. If you’re earning big money in New York or London, you’re unlikely to come here for the money alone,’ he says. The top tax rate in Australia is also higher, at 48%.
Equally important, Australian banks won’t fall over to hire you if you’re a senior banker in a relationship role and you don’t have senior Australian relationships. This rules out most top level corporate financiers and sales staff who have worked out of the region for too long, says Markiewicz. He says some of the most marketable profiles in Australia right now are analysts, associates, and junior VPs: ‘Banks are all very keen to hire younger people.’
Theoretically, it should be easier to emigrate to Sydney if you work in the back office, where relationships are less of an issue. Again, however, the possibilities are broader if you’re junior. One managing director in operations at a US bank returned to Europe due to a lack of challenging roles: ‘The problem is, there are very few big jobs in Australia,’ he complains.
Assuming you find the right role, however, time in Australia may be a springboard to greater things. Last June, for example, Deutsche Bank promoted Australian banker Tony Burgess as co-head of its M&A business. Not bad for someone whose career was shaped within cycling distance of Bondi Beach.