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As global investment banks pull their horns in, Australian pay rates and cost of living is exposed making hiring there very difficult

Posted in News
Bright lights but IB job prospects are dimming in Australia. Image sourced from Shutterstock.com

By Simon Mortlock*

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 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.”

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We have expanded our finance sector jobs listings and you can now find these here » for New Zealand, Australia, and Singapore.

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Simon Mortlock is a senior editor of eFinancialCareers.com.au where this piece was first published. It is used here with permission.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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2 Comments

Australia is a high-cost,

Australia is a high-cost, high-wage destination
 
Ditto New Zealand - the so-called elite have priced ourselves out of international contention as far as earning a living from profitable export sales are concerned - the problem is endemic at the pricing barriers where it counts. Why are we so slow or is short term greed just worth it?

So Australian i bankers are

So Australian i bankers are over paid.
What have they ever done. Apart from list Allco, list Babock and Brown, sell toll roads as safe investments..... you get the picture.
It more a case that Australian corporates and Govt. are mugs for still paying their OTT fees.....
LOOK AT THE MIS PRICING OF FONTERRA UNITS.......
say no more.......
 
Here is some of their handy work:
At nabCapital, however, what we describe as “structured finance” has tended
to focus on forms of financing that rely on the favoured treatment of that
structuring for tax purposes. This may result from tax arbitrage
opportunities that exist between two different jurisdictions, the use of a
concessionary tax regime in particular jurisdictions, or differences in the tax
status of the counterparties

http://www.courtsofnz.govt.nz/cases/bnz-investments-limited-ors-v-commissioner-of-inland-revenue

www.courtsofnz.govt.nz/cases/bnz-investments.../fileDecision
File Format: PDF/Adobe Acrobat - Quick View
Jul 15, 2009 – The National Australia Bank or its other .... that's much used” (Transcript 3400). ..... obtain a binding ruling from the IRD, which is not available from the ..... for UK tax purposes the preference shares were treated as having ...
 
[332] A good part of the lengthy cross-examination of Mr Birch was directed to the
GPF. The more pertinent parts of that cross-examination include these:
Q. And do you recollect why Allco used that figure?
A. I think at the time we were trying to work out what would be an
appropriate rate for the guarantee procurement fee. I didn’t have a
lot of experience at working out those rates at that time, Allco did, I
think they went away to have a think about it, came back with
2.95%.
Q. What did AIG, how were they involved in the discussion?
A. That rate would have been discussed with AIG at that point.
Q. By Allco?
A. No, by both of us I suspect, by Allco and ourselves.
Q. But there are no documents about that?
A. No, there’s not.
 
and
http://www.courtsofnz.govt.nz/cases/westpac-banking-corporation-v-commis...