Bonus buyouts start to make a return
Bonus buyouts start to make a return as banks and hedge funds try to prise out the top earners
Continuing strength of job creation in the City new jobs in September rise 2.5% from August
Banks and hedge funds are stepping up their bonus buyout offers as they try to prise key staff from their competitors says Astbury Marsden, a leading financial services recruitment firm.
A bonus buyout is where an employer will offer to buyout the shares or options that a prospective employee has accumulated under their current employers bonus scheme but which they do not yet own (i.e. the shares have not yet vested).
Jonathan Nicholson, Managing Director at Astbury Marsden: Banks are now prepared to buy out 100% of a potential employees shares or options they have locked up with their current employer.
Astbury Marsden says the buy-outs of shares are taking place in 80% of new hires compared to just 20% of new hires a year ago.
20% of bonuses are now bought by giving the new employee cash, with the remaining 80% bought by giving the new employee shares and share options says Astbury Marsden.
Astbury Marsden says that bonus buyouts have accelerated in the last month as banks try to winkle free their competitors best earners before the recruitment market slows down at Christmas.
Adds Jonathan Nicholson: Banks and fund managers are confident about next year and they still want to add to their teams. Within reason, they are willing to pay for the talent.
A successful trader or banker will now no longer move unless their entire share bonus scheme is bought out a year ago they would have been more flexible now they dont want to forgo a penny.
Astbury Marsden says that their overview of the market shows a more optimistic picture of City recruitment trends than have been suggested by other sources.
According to Astbury Marsden, 5,157 new City jobs were created in September 2010, a 2.5% rise on the 5,031 created in August 2010.
Mark Cameron Chief Operating Officer at Astbury Marsden comments: Recruitment across the City is not universally strong and some recruiters have reported weakness in their markets especially in IT. But, on aggregate, the City is still building teams and positioning itself for medium term growth.
Astbury Marsden says that banks are still aggressively recruiting for interest rate derivatives in part because of the demand that the changed interest rate environment and the roll over of pre- credit crunch debt is expected to create.
Equity derivative teams are also still expanding - Astbury Marsden says that demand for staff within this area is being sustained by a relative volatile market. Meanwhile emerging markets recruitment within the UK has tailed off slightly.
Mark Cameron adds: We are still being approached by banks and fund managers telling us what kind of increased market share they want to take. That healthy level of competition is good news for staff but competition is not yet at the kind of crazy level where it impacts negatively on cost to income ratios.