JP Morgan executives were the highest paid investment bank managers in 2012, with an average compensation of $1.7 million paid to managers in charge with mergers and underwriting, according to a report by British consultancy company Emolument which highlights the gap between American and European companies. In second place is Morgan Stanley, which paid, on average, $1.4 million, followed by Goldman Sachs, with $1.35 million.
“The U.S. financial services market is proving to be stronger than Europe at present and we’re starting to see a growing disparity between salaries in London and New York,” said Neil Owen, manager at London-based recruitment company Robert Half (RHI) Financial Services. He added: “Banking and capital markets professionals in New York are earning as much as 25 to 40 percent more in base salary for the same role.”
The remuneration paid by the European financial companies was lower: HSBC, Societe Generale and BNP Paribas were paying the executives on average under $806,000, according to Emolument.
“There is a divide opening up between pay levels in New York and London. Some of the European investment banks are scaling back heavily and having to accept that they can’t pay people at the same level as U.S. firms,” said Tom Gosling, from PricewaterhouseCoopers LLP in London.
Financial companies in Europe have problems due to the sovereign debt crisis that has reduced revenues, while regulators require them to hold more capital and limit bonuses for executives.
“Europe is still weak and banks are still wielding the ax, meaning compensation pools are far smaller and there are fewer questions asked when poor bonuses are announced.This is likely to continue in the near term,” said Nick Sisnett, a consultant at Altus Partners in London.
The report was conducted by anonymous interviewing directors on remuneration. The survey was conducted based on responses of 190 executives from 12 companies. About 62% of them work in London and the rest in Paris, Frankfurt, the U.S. and Asia, according to Emolument.
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