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Top bankers are in such heavy demand in the City of London that investment banks are willing to buy out the annual bonuses of executives they want to hire, a survey said on October 20.
Bankers can earn many times their annual pay as a bonus, which can amount to tens of millions of pounds for high performers.
The bonuses are paid out at different times by different banks, but the bonus "season" usually runs from the end of December through to March.
Bankers are less willing to move jobs while they wait for their bonus cheque, but might be persuaded to jump ship if a prospective employer offers to pay their bonus.
"With bonus expectations running high, individuals are less willing to move roles prior to receiving their bonus payout," said Robert Thesiger, chief executive of City recruitment specialist Morgan McKinley.
"One way financial institutions are ensuring that they secure the talent they need, is through bonus 'buy-outs', particularly at the top end of the market," he said, adding that these were happening more frequently this year.
The investment banks in the City of London are enjoying a boom year for M&A deals and new share issues.
European mergers and acquisitions were near all-time highs in the third quarter and by the end of the year could beat the $1.2 trillion record for deals set in 1999 at the height of the Internet boom.
Bankers say the fourth quarter will be hectic and they are optimistic about the buoyant market conditions continuing into 2007.
"With further expansion expected to take place in 2007, individuals at all levels will be in demand and unless companies are willing to buy out bonuses, candidates will be harder to get across the line," Thesiger said.
By buying out bonuses, the banks can get key staff on board more quickly, otherwise they face having to wait months to try to hire them.
But Thesiger also said investment banks have become more disciplined about hiring than they were in the late 1990s.
Morgan McKinley's September survey found a 5 percent fall in job vacancies compared to the previous month, which reduced the gap between candidates and vacancies to 14 percent in September from 20 percent the month before.
The average salary in the City of London financial sector remained stable at 51,443 pounds, a 2 percent increase on the previous month.

Copyright Reuters, 2006

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