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Investment banks in Australia push back on pay

Investment banks in Australia are trying to drive down the salaries of “overpaid” new Australian hires, according to the 13 senior human resources professionals from large, mainly global, financial institutions who attended an eFinancialCareers roundtable in Sydney this week.

The delegates, who are based in Sydney and asked not to be named, agreed that Australian investment-banking salaries, which rose in 2010 and 2011 to compensate for declining bonuses, now appeared artificially high.

“Sometimes we just can’t match or beat the base salaries of the people we’re trying to hire from competitors in Australia,” a representative from a US investment bank said. “In these cases, while we still offer competitive compensation, candidates need to decide whether they want to join us because of the other things we offer: the strength of our brand, client access, and opportunities for career progression.”

Her counterpart from a European bank in Sydney added: “In investment banking, the base pay we’re offering is falling on the back of our revenues falling last year in Australia, as elsewhere. It’s a difficult, more regulated market and we’re just not making as much money from i-banking as we used to.”

For candidates in in Australia, however, it’s often a question of take a cut or don’t change companies. “Their negotiating power has all but disappeared,” a roundtable attendee said. “It’s less likely, too, that we will pay sign-on bonuses or buy out their shares.”

Salaries in Australia aren’t falling fast enough for the senior managers in the US, Europe or Hong Kong who make final hiring decisions for their Australia offices. “When overseas candidates move to Australia, my biggest internal challenge is getting their local salaries approved, even at levels I don’t consider being too high,” an HR person from a US bank said.

Several roundtable delegates bemoaned that their overseas head or regional offices worked out Australian salaries solely by converting foreign candidates’ current pay into Australian dollars. “But that’s often not enough because even if they’re falling now, salaries here are still higher than in many other markets,” one of then remarked. “If you want to retain talent that you’ve moved to Australia, it does come at a price. Australia is a high-cost, high-wage destination.”

An attendee from a European bank said she often had to remind head office of the firm’s own Australian salary bands. “Approvals, whether the person’s already based in Australia or moving here, are very complicated these days, especially when it comes to pay. You literally have to fight with head office to get anything done. The interviews process is fast enough in Australia, but there’s always a risk that the job will fall through because we can’t get our offer signed off internally.”

Comments (2)

  1. And how is this supposed to allow the economy to grow?
    With House prices here in Sydney being amongst the most expensive in the world, and the cost of living being controlled by monopolist regimes as the 2 supermarket chains we have…which I may add are not a patch on their european counterparts.
    While we wait for head office approval we suffer looking at the same job through multiple employment agencies who are fantastic at getting back to us…..ahem…..and finding that there are not that many jobs out there as they are being moved off shore. So the ones that do keep us going are the ones that are more expectant in exacting experience, so much so as one yr off the requisite and you can not even be interviewd…for a contract role! most of the jobs are advertised and start as temp…try b4 you buy scenario…thats great for the economy hey..banks just love lending $ to people on contract roles…me thinks the fat cats should be the ones taking the pay cuts, not the mid levels or below.

  2. As with most corporate HR issues, a paradox exists in the paradigm.

    Australia’s pursuit for senior, experienced individuals for their banking roles will end up as a counter-intuitive process.

    Experience is a lubricant that ensures the smooth operation of a business. But the true driver for sustainable growth is the engine of innovation through ideas. Alas, that can only be achieved by absorbing an initial “training cost” to develop and refine rough talent.

    Britain is suffering a slow economic death today, paying for the sins of neglecting the expansion and acceleration of its youth in the past.

    A brain drain is a huge human capital cost to the economy, one that is difficult to reverse and overcome.

    If Australia continues in this path, the country runs the risk of following the footsteps of Britain -an ageing population with no innovative growth.

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