SPEAKER_02 0:03

The OneSearch Podcast. Insights and opinions on the subjects that matter. In global infrastructure, financing and investment. With the OneSearch Credit Practice.

SPEAKER_00 0:20

So, welcome to the uh number seven in the OneSearch podcast series. The uh what are we, G?

SPEAKER_01 0:29

The most I always say this, then you say it's wrong. The most diverse credit team.

SPEAKER_00 0:34

You got it right.

SPEAKER_01 0:35

Thanks, Namisha.

SPEAKER_00 0:36

I'm not gonna say it wrong because you you didn't get it wrong. You got it right. The most diverse uh uh credit practice in infrastructure recruitment, talking around compensation issues themes in the current infrastructure debt market globally. Today we're gonna get into the mid-level. So we get a lot of inquiries from people at the mid-level talking to us about compensation. A lot of those guys we know are listening to the podcast and been writing in avidly in their droves, asking when we're gonna get into and away from the senior level uh people that we've talked about previously. Um, Mercedes, tell me what when we talk about the mid-level, who are we referring to?

SPEAKER_03 1:16

For the mid-level, we're referring to senior associates and VPs. Senior associates at the top end of associates, which tend to have five to six years of experience. They um, and then the VPs um anywhere from six to ten years of experience max. And yeah, they tend to do the execution of the deal.

SPEAKER_00 1:39

Very good. And uh, so we're we're taking it right through to the top end of VP, and that marries into you know prior podcasts where we've talked about director and above. So we're taking it right up to the uh, you know, the guys uh that are just pre-director level. Um, and apologies to anyone who can hear that uh rather annoying noise in the background at my end, but someone's building a bar at my house. So I'll keep you all updated on the progress of it. Uh the noise was also there in the Niall Mills podcast. Uh, it's taking some time. Oh, did you hear that? It's gone. They've stopped. They've stopped. Maybe they know that we're recording the podcast. Anyway, uh, I shall definitely keep the listeners updated on the progress of the mahogany bar that's being built in my porch. But anyway, back to mid-level uh infradebt professionals. As always, we're gonna cover the email market, we're gonna talk about London predominantly and then any variations that we can we can note uh regionally. We're then gonna come to the USA and compare and contrast to that. So, Namisha, uh, take us away. What's happening in the London market within the banks and the infrared funds when it comes to these mid-level professionals?

SPEAKER_04 2:54

Yeah, so uh I guess a rough range to kick it off, because that's that's what everyone's interested in, um, in terms of base and bonus uh across these levels. So at the senior associate level, um, sort of five, six years of experience uh across the banks and the funds, roughly around 75 on the base, up to 100 on the base in pounds, and then bonuses anywhere from 40% to 100%, then moving up to the VP level, so sort of VP, junior VP all the way to senior VP, um, rough bandings 95,000 pounds on the base, all the way up to 140,000 on the base. Um, and then bonus range 50 to 100%. So that's the rough bandings. Uh, of course, as always, there are outliers within this that are paid either more or less, but that is just the core bracket, let's say, where the majority of individuals um that that we are speaking to in the market um come in between. So I guess just some interesting touch points on those outliers. For example, there's a senior associate at the moment within a bank that I'm speaking to that is above that 100k marks. Um, that person's actually on 115 on the base, but a bonus is very much at the bottom end of that bracket at 40%. Um, so that's a just an example of an outlier that I'm currently in process with at the moment. Another one at the VP level within the banks at 150 on the base as a VP, 70% bonus. Um, it's a bulge bracket bank. So as you would expect, at that sort of top end. Um, so yeah, that's kind of the rough bandings. I think another interesting data point, let's say, is the difference between the banks and the funds in London and how they pay differently. So on average, I would say the banks are paying less. They're coming in at that lower banding as opposed to the funds. Um, and that's both on base and on bonus. Roughly on the bonus side within the funds, it's it's never really below that 50% mark. I'd say the core bracket is really 60 to 100%, both at the senior associate level and at the VP level. But within the banks is where you find that that lower sort of figures that I was discussing around sort of the 40% mark um on the bonus. So yeah, I think on average, funds are paying at the top end um of the bracket as opposed to banks, which is was the same for the seniors in the market as well.

SPEAKER_00 5:41

So look, there's a lot to unpick there. I think I mean, just as an overview, what you're saying, Namisha, is that the the the range that has been established there with the banks, you know, in terms of the upper end of it, is still the range that the those debt funds are playing in, but they're just at the upper end of it and they don't they don't stray into the into the the lower end of the bracket. Is that a fair way of of putting it? Yeah, exactly that. Okay, okay, good. So where we're seeing, and I looked at the the data that you that you put out here for the podcast, the I mean, there are some real outliers at that at that bottom end, and again, as always, we won't name any names, but I see here a senior associate, uh, an Australian bank on £75,000 plus 25% bonus. I mean, that is um total comp wise, you're talking about 90k, which is less than the base salaries of some other senior associates. I mean, how that's quite that's quite something.

SPEAKER_04 6:42

Yeah, definitely. I think they're again another outlier that is just completely below the market, to be honest with you. Um, even when you're comparing it to some of the other banks, um, just completely out of the market. I mean, there's another another bank with someone at exactly the same level who's on a 90k base and earning a hundred percent bonus. Um, so the difference in Compler is is double from bank to bank, which is is quite astonishing, yeah.

SPEAKER_00 7:09

And this is it's at this level that, you know, you think about people's sort of you know, lifestyles and that and their trajectory through their 20s and early 30s and what their needs are in life, and you think, well, you know, at that slightly more junior end of the career, I guess the the desire for a fixed salary, maybe it's at the age where people are starting to get their first mortgage or you know, whatever other pressures in life, not had as much time yet to build up wealth where the base salary is a real pressure point, right? So do you do you see people that are moving jobs driven by, frankly, uh knowing that there's a big delta there in base salary and they can make a big jump by moving to a uh a competitor bank?

SPEAKER_04 7:52

Yeah, definitely. I think the key thing is with every bank or fund is that the bonus is discretionary, right? So it could be a year like we've just had at the moment, and you you don't really know where things stand. Um so I think that base salary is critically important. And if you're below market, um you are seeking to just get on par with the rest of the market. Um so yeah, I think that is a real factor. I guess that bank is a is a pure lending bank. So that's the only thing that they could probably stick to in thinking that perhaps their hours aren't intense as other institutions that are doing a mixture of lending and advisory, uh, where the hours are probably a lot more intense. Um, but at the end of the day, there's still other pure lending banks out there that are pay market. So it's not really, not really a massive factor, in my opinion.

SPEAKER_00 8:40

Mercedes, uh t tell me what you think. That I I've got a theory that when we we talked about that example uh there uh that Namisha gave of a senior associate on £115,000 base salary, but the bonus is at the low end at 40%. My theory is that institutions like that um have decided that for those more junior people the base salary is more important. That's what's gonna help them attract talent. That frankly, they're gonna be uh they're gonna go for that big base salary, even knowing that the bonus might be a bit smaller. What's your view?

SPEAKER_03 9:13

Yeah, I think that that's a really good attraction tool to give a strong base salary. Because again, as as Namisha mentioned, you know, these bonuses are discretionary, so it's very important for for them just to secure a strong base.

SPEAKER_00 9:29

But there's but then you you ask yourself if there are other institutions where you could take a slightly lower base at 90 and these guys are paying out 100% bonuses, and again, I won't name them, but you know, it's um that yeah, there are a couple there that um you know that are in that top end of the range amongst that uh you know the banking community, that difference in terms of total comp is significant, you know. You don't think that there's no definitely.

SPEAKER_04 9:55

I I guess the flip side to it, and actually I won't we won't mention names, but there is a bank that have had over the last 12 months, I'd say about seven people leave their team. Um quite recently, I think you you took the most recent member, Dan.

SPEAKER_00 10:10

Um we might as well say who it is now.

SPEAKER_04 10:14

Yeah, we might as well. Um, but yeah, I mean they're they have completely inflated base salaries and also have um what's called this kind of cla cash flex allowance um on top, um, or flex allowance, which they all take as cash, and their base salaries are just so above market. Um, and it does retain people, but as you can see, they've all moved on. And I know for a fact some of them have not moved for higher base salaries, but they've moved for higher total comp for sure, because their bonuses are nowhere near market.

SPEAKER_00 10:46

And you know, and that's one of the things about being government-owned, is that you know, frankly, and we this has taken us back over a decade now, honestly, that we've still we're still seeing the effect uh uh of the the credit crunch, the GFC, whatever you want to call it, the uh the the British government coming in to to bail and other governments in other countries coming in to bail out banks. And what does the taxpayer not want to see? They don't want to see all these greedy bankers getting paid big bonuses. So what happened? They uh the banks uh drastically inflated the base salaries to compensate these bankers for the fact that their bonuses would be so much lower. So, you know, it doesn't take a genius to work out, therefore, when you're talking about some of those banks that have got a good a really strong market base, but the but the the bonus is tiny in comparison to the market. So right down there in that sort of you know 40% uh end of the end of the range. And as Namisha rightly says, I think in a market like this where there's so much opportunity, there's so much demand for that talent, uh people believe that they can, even if they take a small hit on their base to move to another platform where they can get a much bigger bonus, that's a risk worth taking. Whereas straight after the the credit crunch in those early years, people were just happy with the big base, frankly, because the world felt so uncertain.

SPEAKER_01 12:11

There are links doing that here too, Namisha. That they're a bit at least like they're pretty much honest when they'll join, saying like the the base is very it is definitely above market, um, but you probably won't be getting a bonus. Or if you do, I think the one thing that I will say is you're right, people should be leaving for an all-in that's higher because it's gonna be incredibly higher, right? However, there are people, I don't know if you run into this in a misha that I've worked with that if they can't get an increase on their already competitive base, they won't leave. And in fact, those people end up staying there. So I don't know if they're doing that strategically, hoping that no one's gonna be able to compete with their base salary. Yeah, definitely.

SPEAKER_04 12:55

I mean, I speak to candidates that unless they get an increase on their base, they don't want to move. But as as we're saying, I think it's fairly narrow-minded in those institutions because you could move for, I mean, what's the difference in sort of five, ten thousand if you're gonna get an extra 40,000, 50,000 on your bonus? It's you're still you're still up. But I think, yeah, it's it's just a mindset, I think, more than anything else. But I think it is moving away from it.

SPEAKER_00 13:23

It's a leap of faith, though, isn't it? Believing that you're gonna get that uh that bigger bonus uh when you've got you know, you're in your comfort zone where you were where you work at the time, and you know, you're told, oh, the bonus is gonna be bigger, but I guess it's just that initial leap of faith. People want to feel that they're making a positive move on the base. So there we go. Issues that we're dealing with every day, guys. Um, look, that's a neat segue into the US market. The as I've said before on these podcasts, at this, in these more junior levels, in this mid-range in the market, you definitely see, um, notwithstanding any variations in the in the FX rate between the pound and the dollar, you see a premium on people in New York for sure, in the US, uh, for sure. Even after you've done the currency translation, even at a very high in in recent years, $1.4 uh dollars to the pound, you still see on top of that 10 to 20% premium on the US. Gee, tell us tell us the numbers.

SPEAKER_01 14:23

Yeah, absolutely. I'll just jump right into it. I know that's what people want to hear. Um, so at the project finance banks at the senior associate level, I'm seeing around 150, 165 base bonus, 80 to 100%. I'll explain outliers in a moment. And when it comes to the VPs, 170 base to 200k base bonus is also around the 80 to 100%. There's outliers in both directions, um, Dan. I mean, I know right off the top of my head, three VPs that are getting paid 220 to 225 base.

SPEAKER_00 15:01

Would they all have you just place one of them, G. You just place one of them last week?

SPEAKER_01 15:04

I did. And I also know the other two really well. And I do think they all have something in common. And it it may be good for you guys if you maybe want to put your two cents in. Um, because I asked them, and that's high for a VP, I think at least, right?

SPEAKER_00 15:18

I mean, well, don't tell the don't tell our clients that, G.

SPEAKER_01 15:21

I think it's good. I don't think that's a good thing.

SPEAKER_00 15:23

Let's keep that one a secret.

SPEAKER_01 15:25

No, I think every person that's at that level is doing either like a tax equity component or advisory component, and it's not just balance sheet lending. And they're not doing portfolio management. I don't know if that might have something to do with it, but I do see that's one common factor in each one of these people that I speak to.

SPEAKER_00 15:42

That's a really interesting point, actually, that we've not we've not covered on these podcasts before is portfolio management. And yeah, I I guess in a lot of the banks uh um or debt funds that we're working with, they're two separate things, right? Um, you know, the origination execution people here, and then the portfolio management people here. And there's a there's a distinct difference, isn't there, in terms of compensation between the two. I mean, I think so anyway. Uh largely the difference comes in uh a bonus potential. It's mainly deemed, I think, that originators and executors are at greater, you know, there's a greater risk reward spectrum in terms of these guys have gotta make it happen. They've got to make the origination and execution of that mandate happen. Otherwise, there'll be nothing uh to put into the portfolio. There will be no additional asset. But is there a sense? I well, I think there is a sense that uh portfolio management is well, look, here's the portfolio, don't screw it up, you know, and the bonus is therefore less attractive. Whether that's fair or not, that's the that's the situation as I see it. But gee, to your point, you've got teams in the market, haven't you, where people are actually doing both. They're actually doing origination or maybe they're doing execution and portfolio management. So, how does that shake down when it comes to comp?

SPEAKER_01 17:06

I'm happy you brought that up. Um, so we talked about one direction of the compensation going as an outlier, and then there's going below what what the market is. And I have to say that that's definitely one reason. I'll get to the other one is the banks that are split 50-50 with portfolio management and execution bonuses tend to be around 50, sometimes 30%. Um, this past year was a tough year, so I'm going off of what I have heard in the market recently. And even the base is a senior associate, probably around the 140, right? I mean, we've had experience placing folks um into those certain places. What's the pro to this? Work-life balance. They're not working on weekends, they're not working until one in the morning. I mean, it depends on the person, but that I think that is definitely one point of why compensation is less with portfolio management.

SPEAKER_00 17:55

Yes, look, stability of position, in my view, as well. I mean, after we talked before about what happened after the credit crunch, I mean, I'll tell you something that happened. Um, a lot of the banks thought, oh my God, we've completely neglected our portfolio management, you know. Um, it was always a sense that your your best smartest people were front office going out doing deals, and maybe the not so smart people were in the portfolio team, and no one really gave too much of a damn. It was just everyone was doing well, everyone was doing deals, whatever. And then uh the credit crunch really, I mean, you saw some banks fare far better than others, and I think there was a sense that, oh my God, we really need to pay attention to putting good people into portfolio. And and I saw, and I was part of um, you know, helping some of my clients rebuild those portfolio teams and attracting like some of the guys that would have ordinarily been front office focused to go and work in portfolio at a time when there wasn't a lot of business to be done in terms of new business. The way that you could maximize your your value, your performance was to get to grips with the assets that you already do have on the books and rather than going out hunting for new ones. So I I definitely saw at that point in time a big shift towards people taking their portfolio management much more seriously and caring about having higher caliber people working within it. But I still do think, as we're saying here, that that doesn't translate to equal compensation.

SPEAKER_01 19:29

Yeah, no, I agree. And then there's that other point too. I know we were speaking about this earlier, and it's something that everyone in for energy has seen. A lot of these banks kind of withdrawing from the US. And I think I can say the name at this point, right, Dan?

SPEAKER_00 19:42

Oh, go on, be a devil, G. Tell us, tell us who's who's withdrawing.

SPEAKER_01 19:46

It's not negative, but I mean, come on, it's kind of common knowledge. ABN, you know, they're pretty much wrapped up their practice here. Um, they're all looking. It's not a surprise, right? I mean, they're not gonna have a job come January next or yeah, next year. So I think that's one thing that you also keep seeing, and Dan, I know you mentioned this before. There are a lot of banks that are kind of looking away from the US market, and it is affecting compensation, at least on the bonus end.

SPEAKER_00 20:13

Look, I you know, this is a this is a a theme, and I don't know what you guys have got to to chip into this, but the nationalities of banks often reflect when you look at, I'm looking here at the data that you guys laid down, ready for this podcast, and the banks that you've given me examples from. And you can you can categorize those by what country they come from. Um, and it I think you can read into that some of the issues and the philosophies of the countries in question. So, for example, you mention ABN AMRO, which is still a thing in America. I mean, people know it as a distinct platform, whereas in the UK it was swallowed up and was part of that whole RBS implosion. We've mentioned the British government uh uh then bailing the bank out. But here in America, uh ABN AMRO is still a you know defined uh uh uh thing and but is retrenching, going back to Europe uh only. Um but you see that then throughout the Dutch banks, you see the the cap on bonuses that if you're gonna have a cap on bonuses in your home country, you can't then be seen to be paying the guys in America great bonuses, it just wouldn't play out very well back in your home country. So, what do you get? You get a situation in the US where uh frankly, and you know, no no easy way of putting this for our good friends at ING, um, that you know, you're right at the bottom of the pile when it comes to bonus percentages. And and and clearly, in what's a hot market, you've seen a huge amount of of attrition of people leaving ING in recent uh what months and over the last couple of years, you've been a big part of that, G, haven't you? Uh uh moving people away from ING and they know it. So no point keeping it quiet because they've already called you out on it. Um what else, guys? I mean, in it's In terms of nationalities of banks, are there any other uh good examples there?

SPEAKER_03 22:05

Well, I find that um the American banks are the ones that in in average total comp are usually paying the most and they tend to focus on advising. So your citibanks and your, you know, Goldman Sachs, you know, those those elite banks, they're always top-tier comp. Um, and then I always find the European, you know, so your French banks, EU banks, or some like international banks, Canadian banks would probably be in the middle to sometimes top tier. So they and they do a blend of lending and advisory. And then I would say on the lower end is usually maybe the Japanese banks or some smaller regional banks, and they mostly do balance sheet um lending, with an exception to a few. And then they have because they have a long-term view and just culturally, they just probably don't feel comfortable paying uh at those levels because they're not doing advisory. So I think that that's the way I've always looked at it.

SPEAKER_00 23:12

Look, I think that's right. It's very American, isn't it? To it's like the bold, like, you know, we're not interested in any of this sort of, you know, low interest, long-term lending stuff. We're gonna go out there and we're gonna do some big deals in the infraspace. We're gonna be MA, debt advisory. That's where you see those guys playing. And um, yeah, I mean, there there's no question that yeah, the guys who work for those teams, for the bulge bracket banks, for the sorts of you know, the boutiques that are excellent, that infrastructure and energy advisory space, Canter Fitzgerald, great team, uh, led by the inimitable Harry Chandra. Um, just a bit of a shout-out there for Harry. Those guys are at the top end of the of the comp spectrum, right? Good old American institutions. Good. Okay. Well, look, that is a uh that's that's interesting. But look, before we wrap this up, um how much do we see? I I think that we've come to a bit of a consensus through these podcasts that in America, and Mercedes, you've done you're an interesting one because you've you've worked in both uh locations. So I'm keen to ask you about this. I think that here's the theory, and then you tell me if it's true. In America, there's not that much difference uh in terms of comp from New York through all these other locations, even though they're as far apart, further apart actually, than than London and the various far-flung locations around continental Europe in terms of number of miles of distance, you see far less variation in America than you then do if you go look at London v. Paris, London v. Frankfurt, London v. Amsterdam. Do you agree with that?

SPEAKER_03 24:51

So I found that uh working across uh New York and London, that there is a difference in compensation um for uh identical roles. So across senior associate to VP, uh New York pays higher, uh 20% higher. So uh senior associate to VP averages, you know, we have $270,000 to $330,000 average. And then in London, we have $147,000 to 280,000 uh British pounds.

SPEAKER_00 25:31

Well, that's true, but tell me, between so, in terms of the variation in the in Europe, those those numbers that we were talking about, they're London numbers, right? So my question is what's the variation on those numbers? Because some you know, excellent young uh associate or even not young, perfectly uh okay to be a uh a an associate who's not very young. Uh, but a a a fantastic associate of any age may be sitting in Paris listening to this and thinking, wow, those numbers seem huge compared to what I'm earning, uh, you know, XYZ French institution. There's a big difference, isn't there, from London to Paris or London to any other European city, and that's and we're not seeing that in the US. That's my point.

SPEAKER_03 26:17

No, I think that it's just because the US is, you know, United States, it's it's it's a country, whereas, you know, from London, it's just different countries, you know. We have Madrid, we have, you know, Paris, we have, you know, Frankfurt, Munich, so all different sort of banks and different sort of cultures and ways that they, you know, invest and advise uh their their clients. So um I think that they're they're definitely on the lower end in in Europe and then higher in in London.

SPEAKER_00 26:53

And I'll tell you what, you know, that 20% premium on New York, I mean, judging by how much it's costing me to get this bar built out on my porch, I've got to tell you, you know, the cost of living here, you know, have you seen a G? You're interested in stuff like this. Have you seen what's happened to the price of lumber?

SPEAKER_01 27:09

Plywood, what is it?

SPEAKER_00 27:10

Well, no, it's not plywood, mahogany, actually, my bar, but yeah, I'm sure it applies to plywood as well. I wouldn't know.

SPEAKER_01 27:18

But I've been seeing more, I've been seeing the plywood jokes going all over the place.

SPEAKER_00 27:22

That that's I've not seen any plywood jokes. Tell us, tell us one.

SPEAKER_01 27:25

No, I mean, I'm sorry, I'm a millennial, so I have Instagram looking at memes, and there's just like making jokes. You want to bring a girl to like an expensive place, you bring her to Home Depot or the plywood section.

SPEAKER_00 27:36

Right.

SPEAKER_01 27:36

It's so expensive.

SPEAKER_00 27:38

I get it. Well, I I I'm the butt of that joke right now because I just had a guy go and buy a lot of mahogany uh on my behalf, and uh he was lamenting that in his long career of mahogany buying, that he's never ever seen anything like it. So the joke's very much on me. Um that is so you know, and that's that is a uh a US phenomenon right now that um and I don't think you're allowed to talk about it because um you know it's been stated by the excellent energetic new president that uh there is no inflation, definitely not, so there can't be because he everything he says is definitely true. Uh, and so there is no inflation, but so it's just a complete mystery. Why is the price of everything going up so dramatically? I don't know. I don't know, but anyway, just in case those poor folks in Europe, there's associates in the banks and sort of you know feeling too jealous about the the guys in New York, don't be. These guys are really having to pay for it. You know, the price of everything is going up. Anyway, that is uh we've run out of time. I was gonna tell the story of when Keith Cotterall uh uh resigned to fall on his sword to uh to save Asifkafor and the Amy Ventures team. Uh, but I uh I'm not gonna tell the story now, not because I'm not legally allowed, but because I've uh I've run out of time. Uh, guys, as always, uh great pleasure. Thanks for joining me. And anyone who's got any questions on this podcast, uh, you'll be given the address to send those questions to. See you next time.

SPEAKER_02 29:05

For more information on any of today's topics, or to contact the one search team, please email the one search podcast at podcast at one dash search dot com.