Morning Coffee: The best paid bankers in Asia are not where you think. Citi bankers are happier than JPMorgan's

If you were to ask most investment bankers what came to mind when you mentioned the country of “India”, you would probably get replies like “back office”, “offshore” and most of all “cheap”.  The Indian outsourcing industry has done pretty well out of providing technical support, number crunching and similar commodity services to the world’s banks, taking advantage of its large, qualified, English-speaking labour pool, and its comparatively low cost of living.  Even now, hedge funds like Brevan Howard are building out offices there.

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There is a front office in India too, though, and it is not in any way a cheap labour pool.  In fact, according to the latest survey data analysed by Bloomberg, senior bankers in top Indian cities like Mumbai are some of the best paid in Asia.  At the Executive Director rank, their average compensation for the last year was 24% higher than counterparts in Hong Kong and 37% higher than Singapore.  Pay is roughly in line at the Director and VP ranks, and somewhat lower for Associates, but we would presume that for Managing Directors, the gap might be even larger.

The reason, of course, is that India has been a much hotter market for revenues than the more traditional Asian financial centres.  As well as seeing strong economic growth and record trading revenues, it’s been leading the region in IPOs.  And both global and local banks have been staffing up accordingly.  Like any other market, the labour market for bankers is a matter of supply and demand – everyone wants a chance at the Indian revenue pool, and because it’s spent so long as a relative backwater, there are comparatively few rainmakers who know how to access it.

Which explains the fact that the higher up the tree you go, the bigger the premium earned by Indian bankers is.  For entry-level and junior positions, pay is more driven by local living costs, so it’s lower than Hong Kong or Singapore – you can live pretty well in Mumbai on a salary that would barely pay the rent elsewhere.  But as you get to levels where people are directly generating revenue, bankers in India are in a better position to demand a share of that revenue, and there are plenty of employers willing to hand it over.  And the cost of living is still comparatively low even when you’re earning megabucks.  India has quite high taxes compared to Hong Kong or Singapore, but much lower property prices; the average Executive Director package of $381k can buy a very nice lifestyle indeed. 

Historically, the stars of Indian investment banking have been people like Anand “Selva” Selvaskari, who worked his way up from an operations centre in Chennai to become Chief Operating Officer of Citi.  Or bankers like Vis Raghavan, Sundarajan Ventakrishnan and Anshu Jain, who left India to head up some of the world’s biggest franchises.  But perhaps in future, there will be some hometown heroes who not only manage to make it into the top earnings leagues, but do so without leaving their domestic market.

Elsewhere, Citi may have closed down its legendary Malaga office, but Jane Fraser is still apparently determined to make sure that her bankers get their share of summer sunshine. If you have hybrid working privileges at Citi then you’re currently expected in the office three days out of five, but in August, you’ll be allowed two consecutive weeks of fully remote working.

This doesn’t exempt you from following labour laws, so it’s more use to US employees heading for Florida or California than London bankers who might want to work from the Costa del Sol.  And the more cynical bankers might want to confirm with their line manager that the two weeks remote work is as well as their annual leave, rather than instead.  But it’s being portrayed by HR as a clear vote of confidence that Citi still regards its support of hybrid work as a competitive and recruitment advantage. 

Citi's leniency comes as JPMorgan is admitting that the disappointing results of its latest employee morale survey are largely related to the five days in-office requirement, they might have a point.  Very little actual work gets done in investment banking during the month of August, so bankers might as well do nothing remotely, rather than sitting around gossiping and playing Balatro on a silent trading floor.

Meanwhile …

“And the reality is that for the first half of the quarter, so well into May, the pause was a real pause. You didn't see deals getting priced on the IPO calendar and the announcements had pretty much ground to a halt. What's changed in recent weeks is we started to see the announcements pick up.” Ted Pick of Morgan Stanley appears to be cautiously optimistic about his pipeline... (Seeking Alpha)

… but Vis Raghavan is warning that the state of the US economy is likely to result in “a few hundred million” more bad debt losses for Citi. (FT)

“Ask and listen, both are important”, “Don’t settle for anything less than your best work” but “Don’t forget to enjoy the ride”.  David Solomon gives advice to Goldman Sachs summer interns.  Presumably they already know “stick to two drinks max at corporate events” and “don’t wear a more expensive watch than your boss”. (Business Insider)

The (eventually unsuccessful) negotiations between Greensill Capital and Softbank in 2021 appear to have been unusually intense.  Lex Greensill claims they left him (presumably metaphorically) with “third degree burns over most of my body” and (apparently literally) with PTSD. (FT)

Jeremy Murphy, formerly co-head of the consumer products group at Citi, went to Stifel in 2023, but has now been hired as a Managing Director at UBS, which is continuing to beef up its US franchise. (Financial News)

David Liao and Surendra Rosha are known as “the Twins” internally in HSBC.  They’re the co-CEOs of the Asia and Middle East region, and they are aiming to expand their investment banking business as the bank reallocates resources from other areas. (SCMP)

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