Banks are facing the prospect of double-digit growth in salaries for senior staff and for those in certain specialised positions as the war for talent becomes more intense.
Remuneration and recruitment consultants say the financial sector is short of staff in three areas – risk management specialists, personal bankers (which includes senior staff in private banking divisions and high level financial planners) and experienced middle to senior managers.
Bankers already lead the country’s pay stakes. Banking executives are more highly remunerated than their counterparts in any other industry, according to the Connect 4 Boardroom Remuneration Review.
Chief executives in the banking industry earned an average of $2.7 million in 2005. That figure, for total remuneration, was eight per cent higher than the previous year and the highest level of CEO remuneration of any industry.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
Graduates entering the investment banking industry receive the highest starting salaries of all graduates, according to Australian Association of Graduate Employers’ latest graduate recruitment survey.
According to the survey, the median graduate starting salary in 2007 will be $45,700, a 6% increase over 2006. Graduates taking on investment banking roles will start on $71,400, up 13% on 2006.
Investment banking was at the top of the scale, followed a fair way behind by mining engineers, whose starting salary in 2007 will be $62,000.
The managing director of Hart Consulting Group, Chris Hart, says the hot recruitment area for bankers now is in risk management.
“Banks have a real need for commercially astute people with mathematical or other quantitative skills who can create models for use in managing the transition to Basel II and the implementation of anti-money laundering programs,” said Hart.
“Coming together, those two regulatory changes are having a Y2K effect. On top of that you have some local issues, such as NAB’s foreign exchange scandal, that have generated additional pressure from the regulator for greater focus on risk management.”
Rohan Connors, a consultant at Hewitt Associates, said the high demand for risk managers was cyclical and would drop off in a year or two when the Basel II and anti-money laundering changes were in place.
Connors said demand for personal bankers and experienced managers was a longer term issue. “The problem banks have getting experienced managers is one that is affecting all big companies,” he said.
“For years big companies kept their expenses down by cutting out layers of middle management. There are not enough good people with eight to ten years’ management experience to go round. What makes it harder for banks is that people with finance skills are being sought by all sorts of businesses because of the boom in M&A activity. Big companies are looking for some in-house expertise.”