Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Bankers' Pay Twice That in New York

Investment bankers in Moscow are now earning double the pay of their counterparts anywhere else.

Deal makers such as Ed Kaufman, who left UBS in March for Alfa Bank, and Nicholas Jordan, who will run Lehman Brothers' new Moscow office, are offered $7 million and more per year, industry recruiters said.

In New York, managing directors who arrange corporate mergers and stock and bond sales typically get $2 million to $3 million, according to estimates from headhunters at Options Group and Napier Scott Executive Search.

"This market is hot, hot, hot, and if you want to keep top talent, you have to pay big,'' said PBN chief executive Peter Necarsulmer.

The Russian market has attracted U.S. securities firms led by Goldman Sachs, Merrill and Lehman, which are on a hiring binge as they compete with Renaissance Capital, Troika Dialog and Alfa Bank for the most experienced staff.

"Russia has been spectacular in terms of wage growth for Western-trained, Russian-speaking bankers," said Yiannis Demopoulos, an industry recruiter at Delta Executive Search. Demopoulos said pay packages of $7 million to $10 million are common for managing directors in the city. "There are just not enough high-quality guys and the shortage creates the spike in price."

Alfa Bank lured Kaufman from his job as UBS' investment banking chief in Russia with a multiyear contract that could net him $20 million if targets are reached, two people with knowledge of the hiring said. Jordan is getting as much as $7 million to join Lehman, two people familiar with the matter said. Jordan has not started at Lehman yet and he was not available for comment.

By comparison, senior U.S. bankers in the mergers, equity and debt underwriting departments typically receive salaries of about $200,000 and bonuses of $2 million to $3 million, according to consultants at Options Group. Executives running investment banking units in Frankfurt and Milan make nowhere near $10 million.

Compensation for bankers in Russia rose by about 25 percent last year, exceeding the 15 percent to 20 percent increase in Britain, said Shaun Springer, CEO of Napier Scott.

Industry recruiters at RosExpert estimate that about 150 senior corporate bankers work in Moscow, compared with more than 1,000 in New York. Top deal makers in New York can take home as much as $20 million, including bonuses that depend on the fees they generate for their firm, Options Group said.

There is "a shortage of strong managers" in Russia to handle the record demand for merger advisory and underwriting services, said Igor Shekhterman, co-founder of RosExpert, who is trying to recruit senior bankers for two local firms.

Merrill's Mike Eggleton left last year for Trust Investment Bank. The firm then recruited Bernard Sucher, co-founder of Troika Dialog, in February to run its Moscow office. Gordon McCulloch, a managing director at Goldman, left in March for Renaissance Capital, the same month that UBS' Kaufman joined Alfa Bank and Lehman hired Jordan from Deutsche Bank. None would comment on their pay.

Securities firms want "a combination of Western experience and an understanding of the local conditions,'' Kaufman said. "That is hard to find. And they are having to compete for that small pool with the big guys like Russian Aluminum."

Eric Kraus, a strategist turned investor who moved to Moscow in 1997, said U.S. investment banks are paying too high a price to attract talent just as six years of stock market gains may be about to end.

"The global banks are always either in front or behind the curve, and this time they're behind it," Kraus said.