Junior bankers choosing track records over name value

A number of junior bankers at the Korean offices of major global investment banks such as Morgan Stanely and J.P.Morgan have resigned since July with the end of the annual performance bonus season.

Thinner deal pipelines reduce expectations of big salary increases for the once high-paying jobs as the banks have already tightened their belts by doing away with half-year bonuses amid the prolonged dealmaking drought.

Since July, around three junior bankers with one to three years of experience have left the Seoul offices of some top-tier investment banks, on average, according to industry sources on Friday.

The number may not be big. But considering that these banks hire about six junior bankers, respectively, about half of them have resigned since July.

“For junior bankers, a job at a big-name company used to be their trophy,” said a senior executive of a global bank’s Korean office. “But now it is more important what transactions they have worked on and what they have achieved from them.”

“If they are not satisfied with the deal pipeline their companies have built by the end of the year, they tend to move to another house, or prepare to find a new job as soon as they receive their performance bonus in July,” he added.

Performance bonuses at global investment banks account for 50-80% of salaries. Including bonuses, they pay about 100 million won ($75,000) to junior bankers in their first year on the job in South Korea. Their salaries rise to the mid to upper end of the 100 million won range in their third year.

At the height of the M&A and IPO market boom in 2021, they introduced half-year bonuses to retain talent poached by startups and private equity firms.

But as the dealmaking market shriveled, they have done away with the twice-a-year bonuses and paid them once a year in July for juniors. Working at global investment banks does not guarantee hefty pay unless they work on mega deals.

By comparison, Citigroup Global Markets and UBS, which swept high-profile deals this year, did not suffer a drain of young talent.

Citigroup has won mandates for multi-billion-dollar deals, including the sale of SK IE Technology Co. and Air Products Korea Inc.

UBS underwrote the sale of SK Rent-a-Car Co. It is managing the sale of Ecorbit Co. and Hyosung Chemical Corp.’s special gas business.

An investment banking head of a global bank in Seoul said junior bankers who had been unable to change jobs until last year began leaving as the market passed its worst phase.

“Some banks don't think it is a big deal. They think they can hire people from other companies,” he added.

Write to Jun-Ho Cha at chacha@hankyung.com
 

Yeonhee Kim edited this article.