According to one recruiter, ratings agencies are being forced to increase bonuses to stop the exodus of staff to banks. "They're not keeping up with investment banking compensation levels, but they have gone some way to trying to keep good people," says Bruce Wheelan, a consultant at recruitment firm Andersons.
Where in the past ratings agency bonuses were capped at around 50% of salary, exceptional senior staff are now taking home 70%, says Wheelan. Similarly, junior staff who previously took home 20% are now getting 30% to 35%. Basic salaries have also risen.
Rating structured products is becoming big business for the likes of Moody's, Standard & Poor's and Fitch. Moody's, for example, made US$900m from analysing and rating the structured finance sector in 2006 - more than 40% of its income.
Wheelan says the increases appear to be having the intended effect: "We don't see as many people from ratings agencies as we used to - they seem to be quite happy with their pay."
Ratings agencies have come under criticism in recent weeks for their refusal to cut credit ratings on US$200bn of securities based on home loans. Research by Bloomberg suggests almost 65% of bonds that track sub-prime mortgage debt no longer meet the criteria for the rating assigned to them when they were sold.
Ratings agency pay
Director: Salary 90k-110k; Bonus 25%-50% average, 70% max
Credit researcher: Salary 45k-60k; Bonus 20%-40%, 50% max
Junior research assistant: Salary 25k-30k; Bonus minimal, 10% max
· Source: Andersons