Equity researchers paid better at smaller firms

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Forget bulge bracket banks - one recruiter says equity researchers can earn more working in second-tier firms.

"On average, you can probably earn more as an analyst in a smaller firm at the moment," says Jonathan Evans, managing director of search firm Sammons Associates. "If you are an analyst bringing in a corporate pipeline at a smaller bank, you will still be rewarded for it."

Evan's assertion follows reports that some equity analysts saw bonuses fall as much as 40% last year compared to 2004 and are looking to move jobs as a result. If he is right, they would do well to move to smaller houses.

"I know a few people at second-tier banks who earned bonuses equal to 300% of their salaries last year, and earned 500,000," he says. "They were rewarded for bringing in corporate business on the back of their analysis."

For example, Vincent Laurencin, VP equity research at Exane BNP Paribas in London, told eFinancialCareers he is looking to add staff on the cash equities side of the business. The right pay for the right people is not a problem, he says.

Following allegations that they were issuing overly favourable research, large US banks such as Citigroup and Goldman Sachs have divorced analysts' pay from their contribution to winning corporate finance business. However, Evans says smaller European banks have felt less compunction to make the split: "In the big banks, equity researchers are now paid by the equity sales staff. But in the smaller banks the pay formula is the same as it always was - people are earning bonuses on the back of corporate deals."

He says the pay advantages don't hold true for star equity analysts, who can still command large dollops of cash at the big houses. "A star analyst working in the oil and gas sector at a big US bank would have earned somewhere between 800,000 and a million last year."

By comparison, Evans says average pay for mid-ranking analysts in top-tier banks was in the range of 200,000 to 250,000.