Pay private bankers more, pay investment bankers less

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With the exception of retail bank cashiers, private bankers have always been the poor relations in the financial services dynasty. Even though private banking has performed relatively well this year, this still seems to be the case. And even though investment bankers are now the dogs of the industry, they're still being paid above the odds for their production. The solution is obvious: radical income redistribution in favour of the impoverished private banking community.

The private bankers with the worst deal of all appear to be based at Credit Suisse.

Credit Suisse's Q3 results show that although Credit Suisse wealth management employees brought in revenues of CHF431k ($366k) per head in the first nine months of 2008, they were allocated an average of CHF154k for their efforts.

By comparison, CS investment banking employees achieved revenues of a piddling CHF128k per head, but CHF266k has been set aside to pay each one of them on average.

Deutsche Bank appears guilty of similar private banking and wealth management malfeasance. Average pay in its private banking and wealth management unit was just €65k in the first nine months of 2008, despite revenues per head of €219k. But over at the DB corporate and investment bank, where revenues per head were 78% higher at €392k, corporate and investment bankers earned 220% more than their private banking and wealth management colleagues.

The only bank which appears to accord its private bankers their true value is UBS. In the first nine months of this year, UBS private bankers have been allocated 86% more pay per head than their investment banking colleagues. This may have something to do with the fact that while they've brought in revenues per head of CHF1.4m, UBS investment bankers have nearly wiped out their good work with negative revenues per person of CHF1.1m.