The ups and downs of 2007

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Australia's banking and finance sector had a storming time in 2006. Where will the hot and cold spots be in 2007? Here's our verdict.

Going up:

• Salaries and bonuses After a bountiful 2006, expectations are that the bonuses paid out in the first few months of this year will be significantly up. Macquarie pays bonuses around June and with profits up 51% in the six months to September, chances of the 'millionaires factory' churning out a few more seem high. "Bonuses will be anywhere between 20% to 30% on last year," says Rick Jansz of BSI People. Combine the strong market with the general shortage of candidates, and employees are also in a strong position to demand top salaries.

• M&A and private equity jobs With lots of deals under way, investment banks, commercial banks and private equity firms are actively in the market for experienced staff. "We see the market as still being strong in 2007," says Lorraine Ryan of Chandler Heath. "We have a lot of jobs on that we're still looking at candidates for."

• Fees M&A fees look set to rise in line with jobs in the sector. More than AU$60bn of deals went through the Australian market in 2006, earning billions of dollars for top executives. Macquarie Bank will earn AU$400m from its role in the Qantas Airways buyout. The reckoning is that fees will stay strong in 2007.

Going down

• The talent pool Where's an experienced banker when you need one? Michael Markiewicz, chief executive of Carmichael Fisher, says the fact that local talent is being sucked overseas is making the Australian market increasingly tight: "It's going to get more and more difficult to find good people."

• Job security Strange but true - in a tight labour market, security in some finance jobs is actually going down. Cheaper overseas locations are to blame. Australia's Finance Sector Union is pushing hard to deter the major banks from 'offshoring' jobs to India. At its annual meeting in December, National Australia Bank countered by saying it had increased its Australian head count from 23,554 to 24,263 in the year to September.

• Creditworthiness Interest rates are likely to remain on the rise, fuelling loan defaults and a potential rise in bad debts for banks. The flow-on effect could spur more cost cutting in the commercial banks, which could yet prove bad news for jobs. "There are some little clouds on the horizon," says Carmichael Fisher's Markiewicz. "But at the moment it's all systems go."

What's likely to rise and fall in 2007? Add your comment and let us know what you think.

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