Equity sales staff are increasingly being paid a commission for profits, says one headhunter. True or false?
Mary Farndale, a consultant at search firm Stephen Raby Associates, says a growing number of banks are offering institutional equity sales specialists a commission-based payment structure.
Who pays commission? Farndale points to Deutsche Bank, Lehman Brothers, UBS and Credit Suisse. And she says niche players like Cheuvreux, Exane, Kaupthing and Bryan Garnier are increasingly doing the same - with the result that they're finding it easier to poach talent from the larger institutions.
With technology making it easier to see exactly who's doing what, Farndale is predicting the proliferation of commission-based payment schemes in the months to come, and a flow of talent in favour of houses that offer them.
But Simon Vaughan-Edwards, a director at search firm Akamai Financial Markets, says suggestions that commission-based payouts are about to become all the rage are plain wrong: "It's increasingly difficult to attribute revenue to particular individuals at integrated investment banks - a large institutional fund manager will have multiple points of contact from across the floor."
According to Vaughan-Edwards, the smaller equity houses have always paid commission - typically in the region of 20% to 25% of profits - and always will. The bigger banks don't, and won't.