Latin American bankers’ pay soars

The growing demand for senior investment bankers in Latin America is driving up compensation levels, especially in Brazil where they can now command premium salaries in excess of their emerging and developed world counterparts.

This year, a top investment banker in Brazil will earn an average $1.7m (£1.1m), according to Options Group, a global recruitment consultancy, twice as much as in China, and 15 per cent more than managing directors in India or the US.

“Healthy investment banking activity, paired with a limited pool of senior bankers with broad and deep local relationships, will keep compensation levels competitive,” said Michael Karp, chief executive of Options Group, a US recruitment company.

Latin America is seeing record levels of mergers and acquisitions, as well as debt and equity issuance. This year, M&A has more than doubled in value from 2009 levels to $207bn, according to data provider Dealogic, a 10th of the global total.

Meanwhile, bond issuance in Latin America has risen by 20 per cent to $97bn, while equity issuance is up 67 per cent to $51bn.

This spurt in activity has left international banks struggling to find senior bankers to expand their operations, especially in Brazil. Unlike in Asia and the Middle East, where English is spoken, Portuguese is essential.

“It’s easier to find Spanish-speaking bankers on, say, Wall Street, who might want to move to Mexico. There isn’t the same surplus of Portuguese speakers,” said the head of investment banking at one large European bank.

Senior bankers also need to bring international expertise and government connections. A fifth of Brazil’s publicly quoted companies count the state, in one form or another, among their top five shareholders.

As a result, international banks are having to poach staff from Brazilian companies, luring them with big pay packages.

“This means international banks have to make sure they balance headcount with profitability,” Mr Karp added.

Investment bank revenues from emerging markets stand at $11.4bn so far this year – a fifth of global activity, Dealogic estimates. China accounts for $4.5bn, and Brazil for two-thirds of Latin America’s $1.5bn total. Indian revenues are $877m.

Most international banks are expanding their Brazilian operations as São Paulo becomes a regional financial hub. Brazil, meanwhile, is expected to become the world’s fifth-biggest economy by 2025. Deal flow between the region and Asia and Africa is also rising.

Not all bankers can command a premium. A junior analyst or associate in Brazil earns less than his or her US counterpart.

Compensation takes off for vice-presidents upwards – although it remains about double Chinese levels throughout the pay scale.