In a bad year for bankers here's who's still hiring on $300k+ salaries
If there are lurking optimists who think banks will earn big fees from big deals in 2023, they may want to read today's report from Benjamin Goy, the senior European banking analyst at Deutsche Bank. Goy is not optimistic: he notes that overall corporate finance fees fell 48% year-on-year in April and that any recovery will be gradual; the M&A fee pool is likely to remain low.
And yet, Goy's message doesn't seem to have dissuaded his employer from deciding now's the time to add M&A bankers. Speaking to the Financial Times last week, Fabrizio Campelli, head of Deutsche's investment bank, said Deutsche had already recruited 26 managing directors in the past two months and that more are in the pipe.
Twenty-six managing directors are not cheap. Deutsche Bank pays its US managing directors salaries alone of $500k, according to H1B visa data. But Campelli is not the only one determining that now's the time to accrue senior people in Europe and beyond.
Speaking yesterday, Paul Taubman, founder and chief executive of boutique bank PJT Partners, said PJT wants to add bankers focused on everything from Europe to healthcare, technology and consumer retail this year. "We fully expect that 2023 will be a record recruiting year for our firm," announced Taubman. "We probably sit at the end of April with the same number of hires as we had for all of last year at the senior level." In 2021 (the last year for which accounts are available), PJT's London business paid an average of £558k ($699k) a head.
Ken Moelis, CEO of Moelis & Co, was equally ebullient on his own investor call at the end of April. In the past two quarters, he said Moelis & Co. had added 22 managing directors to help,"move the firm into the next generation and really extend our growth." This was despite the deal pipeline being what Moelis described as "fragile."
Why hire expensive people when fees are at secular low? It's partly down to disaffected Credit Suisse bankers. Moelis & Co. has hired 11, including Doug Pierson, Credit Suisse's former head of industrials, and Deutsche Bank has hired William Mansfield, Credit Suisse's head of European M&A, among others. They're easy pickings. Plus, there's been no need to adhere to the standard 90-day-garden leave policy, noted Moelis.
It's also because what better time than a market lull to put your house in order? We're in a "multiyear cyclical deal-flow low," Campelli told the FT, adding that this is the perfect moment to, "invest in and attract talent.”
"I'll say it's not great out there in M&A land, but that's the only time it becomes available," elaborated Moelis, referring to his own approaching to plucking people. He added that he has enduring regrets about the financial crisis, when Moelis hired aggressively, but could have "been more aggressive,...during that unique moment in time." Moelis & Co. pays its executive directors alone salaries of $275k according to H1B visa information.
Even Lazard, which is among the most doomy of the leading banks about the outlook for 2023 is reserving the right to hire soon after it fires. Speaking last week, CEO Ken Jacobs said that cutting staff early can allow for upgrading and for hiring "senior talent, productive talent" at a pleasing price.
It's bad, but it's not that bad.
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