London sucking up derivatives specialists

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Quants and structurers are paid packets in London and peanuts in Continental Europe. The Continent's being left with the monkeys as a result.

"The people with the best education go where they can get the best money," says Thierry Bossant, a consultant covering France and Switzerland with Huxley Associates in Amsterdam. "In Paris, they can earn €40k plus a small bonus. In London, they can earn 50k plus a big bonus, so they all want to go to London. It's not so much that France has got a shortage of people - more a shortage of good people."

Mike Connolly, a California-based recruiter at MRC, is in the business of transferring quants from the likes of Frankfurt and Milan into London. He says there are pockets of quant talent on the Continent, but the best people want to be in the City - despite being aware that the higher pay packages are liable to be eroded by London living costs.

And once they've quit the Continent, Connolly says it's hard to entice them home: "If someone wants to return to Milan from London, they know it will be on a much lower salary."

A structurer with three years' experience in Milan can expect to earn between €50k and €70k plus a 30-40% bonus, according to Connolly. Come to London and pay is likely to be double at least.

With all the best people in London, there are questions over whether Continental European investors really know what they're doing. JPMorgan recently agreed to buy back €280m of structured bonds it underwrote in Greece after local pension funds claimed they were duped. And earlier this month Italian-based Italease was forced to pay €610m to mostly Italian counterparties after it sold them complex derivative products which (surprise, surprise) lost money when interest rates rose.

France, for one, is trying to do something about the exodus. The Financial Times says finance minister Christine Lagarde is calling for "trendy trading floors" in the French capital.

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