CDO woe vs. irrational exuberance at BarCap

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On one hand Citigroup and Dresdner are eliminating staff. On the other, a newly confident Barclays Capital plans to add 1,500.

First the gloomy news: Citigroup plans to cut five out of 15 people from its London CDO team; Dresdner Kleinwort is said to have eliminated its heads of credit trading and equity and credit derivatives; and research firm CreditSights says European banks are sitting on an additional $12bn-plus of CDO-related write-downs for the year to September alone.

And then the good news: the Wall Street Journal quotes Jerry del Missier, co-president of Barclays Capital in the UK, as saying he plans to add 1,500 staff over the next year, many of them in credit ("the fastest growing asset class"), with a focus on Asia and the US.

What is del Missier up to? London-based headhunters confess bemusement, particularly as most banks are predicting credit volumes will be down 50% for the foreseeable future and BarCap has allegedly been quietly cutting credit pros over at Canary Wharf: "This isn't going to play very well when Barclays gets rid of another load of credit staff before the end of the year," says one.

Rather like Macquarie, del Missier may be hoping to hoover up people who are let go by other banks (AKA Citigroup, Dresdner, Morgan Stanley and UBS) or who leave voluntarily after bonuses are paid.

Options Group is forecasting bonuses for structured credit professionals will be down 15-20%, but one sector-focused headhunter says this is wishful thinking: "We've just done an informal survey and most people are saying cuts will be 30-50%."

2007 Global salary and bonus forecast, structured credit


3rd year associate: Salary - $80k-$90k. Bonus - $150k-$175k

Vice president: Salary - $100k-$125k. Bonus - $400k-$500k

Director: Salary - $150k. Bonus - $800k-$1m

Managing director Salary - $200k-$250k. Bonus - $1.5m


3rd year associate: Salary - $80k-$90k. Bonus - $175k-$200k

Vice president Salary - $100k-$125k. Bonus - $500k-$600k.

Director Salary - $150k. Bonus - $1m-$1.2m.

Managing director Salary - $200k-$250k. Bonus - $1.7m-$2m.

Source: Options Group

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