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Does Investec have a particularly forward thinking bonus policy?

With the thorny issue of how to pay bankers still very thorny, people devising new compensation programmes may want to cast an eye upon Investec.

A South Africa-based spokeswoman for the bank told one of our journalists that bonuses there have been risk adjusted for a long time, and each division has to earn a certain return on capital before its employees become eligible for one.

Investec’s London representatives declined to comment.

However, one of its London-based bankers said the scheme operates in the City too. “The formula is quite complicated, but it’s fundamentally based around economic value added,” he says. “The division has to reach a certain level of value added before bonuses are paid.”

Changes to the system are apparently being contemplated to bring it into line with FSA requirements, but compensation specialists say Investec already appears ahead of its time. “I’m surprised they managed to persuade anyone to work there,” says one.

Comments (15)

Comments
  1. Expect an exodus of the best individuals, followed by guarantees to get them back. It’s forward thinking, in the sense that we can plot the U-shaped forward headcount curve right now.

  2. djm, just curious what people mean by “best” – public school? Tall? Good looking? Accent? Because it most certainly isn’t P&L profitability from my experience in the City, that’s irrelevant vs these subjective things it seems..

  3. Ok Chopra, I’ll bite.

    1. It’s subjective, without being arbitrary. Different organizations will have different measures and application of those measures, but it’s pretty much universal. It’s PnL, and expectation of future PnL.

    2. Public school, looks, accent, etc. only matter if they matter to the bottom line. If someone brings in business because of a Cambridge connection or whatever, they will be paid because they brought in the business, not because of Cambridge per se.

    3. My problem is not with the standard of long term value – I like that part. My problem is with the idea that bonuses are paid due to the total divisional performance. Good (read: profitable) people look at that and think “Why should I have to share my good track record with Moran Hubizetop over there?”

  4. Chopra,

    The public school, height, accent, Oxbridge network etc are important for many aspects of business – M&A, corporate broking and sales namely, as they will directly lead to enhanced profitability. You’ll have business coming straight through if your clients happen to be your schoolchums. For pitching being attractive obviously matters enormously. Only really in Trading is your bottom line P&L the only real determinent, but even there if you’re ugly and not amiable you may be trapped as Director whilst other less profitable, better quality people jump ahead of you.

    Old Etonian 1993 Reply
     
  5. Old Etonian – if that’s true why are some of the most succesful salespeople in the City barrow boys from Essex? The financial markets are the most meritocratic industry going – as mentioned earlier class, upbringing etc only matter if they matter to your bottom line.

    Pythagoras Head Reply
     
  6. is Investec the new Goldman Sachs?

  7. Pythagoras Head – successful Essex barrow boy salespeople will have Essex barrow boys as their clients on the buyside. Depending on the product you sell and the type of client (private wealth, asset manager etc) its important you “match” your client. There’s no way an Essex barrow boy will be top rated at a Mayfair hedge fund full of old-school portfolio managers and analysts. And vice versa. As things get increasingly competitive these days the proportion on both the buy and sell side is rapidly becoming of better quality. Essex barrow boys got through the entry level door in the 80s and early 90s, not today.

    Old Etonian 1993 Reply
     
  8. “There’s no way an Essex barrow boy will be top rated at a Mayfair hedge fund full of old-school portfolio managers and analysts. And vice versa” – that’s absolute rubbish. Thankfully not everyone in this industry is so narrow minded.

    It’s one thing to say you may favour people of your own kind but you’re going a little too far. I suppose you think Jews ONLY give business to Jews and black people only deal with other blacks.

    Pythagoras Head Reply
     
  9. you can keep your old etonian links – it meant you went through pretty humiliating and painful experiences most of us didn’t have to endure. you know what i mean. so don’t be overly proud.

    sales and trading is very multi-national in general. there aren’t too many places in markets where having an old boy link is useful. for sure on IB side i could imagine

  10. For you to say that you are sure not a single Jew in the City would rank a black salesperson top is the most abhorrently prejudice thing I have read for some time. I am Jewish and while I accept there is a tendency for Jews to favour eachother in business to suggest that we are all racist is beyond belief.

    I’m all for free speach but do not think people such as yourself should be given a soap-box for their propoganda. As I said before the City is now a meritocracy where ability and revenue generating potential are the most important factors. I take comfort in the fact that the influence people such as yourself hold in this industry is on the wane.

    Pythagoras Head Reply
     
  11. Pythagoras, why are you insinuating I said that because I think Jews are racist? How about the fact that there’s probably about 3 black (ie Afro-Carib, not Asian) salespeople at tier-1s in the entire City as well?

  12. Henry = Old Etonian, why doesn’t that surprise me

    Pythagoras Head Reply
     
  13. Prejudice is there and to say the opposite it’s just ignoring statistics.
    In my bank, the more you go up, the higher the percentage of white anglosaxons.

    So as a white south-european I already feel rather disadvantaged, and have witnessed many occurrences of said useless white anglosaxons being promoted for no other reason than their look and accent. I have to work deliver incredible quantity and quality, to the point of being almost shameless for me not to be promoted (i.e. routinely hand-holding these useless white anglosaxons in their daily task).

    Let’s not think about black africans and chinese poor fellas.

  14. Forward thinking or simply shafting the deal makers?

  15. And what about the black Jews? Are they discriminated against because of their skin colour or their religion?

    I really care…

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