Managing directors in exotic credit trading and credit structuring at top tier investment banks made about £1.625m on average last year ? about £1m after tax ? according to a salary survey of the debt capital markets by recruitment consultancy Napier Scott. That figure would typically mean a basic salary of £125,000 and £1.5m of bonuses. Top producers, of course, will have made many times more.
"In many cases, these are the most cerebrally gifted traders in the world, and they should be rewarded as such," said Shaun Springer, Napier Scott's CEO.
"We have also seen the continued polarisation of bonus allocations between the top rainmakers and other lesser performers, and a widening of the remuneration gap between first tier banks and the second and third tiers."
Corporate bond originators and mainstream credit traders were slightly less well rewarded than structured credit specialists, though they still managed to keep the wolf from the door.
"We are seeing an increase in demand for DCM origination, but not necessarily corporate originators," Springer said. "Banks are looking to the future."
This is not expected to be a good year for corporate bonds, but other sectors like financial institutions are performing better.
In last year's survey, bonuses for managing directors in DCM origination at top tier firms in the UK averaged £540,000. In this year's round, the same MD would have pulled in £800,000, on top of a basic salary of about £130,000.
A median senior credit trader at a top tier house in the UK, however, would have taken home about £120,000 basic and a £395,000 bonus.
At firms that trade credit default swaps separately, the CDS traders typically take more, but as the product becomes more commoditised, there is pressure on their compensation. Fortunately for them, however, competition for their services from credit hedge funds is supporting traders' market value.
The survey covers compensation levels at the top 50 banks in the Euromarket, divided into tiers ? though Napier Scott does not elaborate on which banks fall into which tiers.
The bottom 25% and the top 5% of results are discounted and the firm publishes the median figure. That means the numbers given are a guide to the general level of compensation, rather than being useful as a predictor of any individuals' salary. Managing directors' packages can vary by up to 400%, including options, Napier Scott says.
One of the most noticeable changes in this year's survey, which includes the latest bonus payments from the Japanese banks ? the last to parcel out their winnings ? is that Wall Street bankers have suffered compared to their City of London rivals, but the steep fall in the dollar may be masking the true picture. The survey used a conversion rate of $1.85 to the pound.
There are growing discrepancies between what banks are prepared to pay their top revenue generators and the foot-soldiers.
According to James Richardson, who prepared Napier Scott's report on the DCM employment market, the weighting of the bonus pool towards management was particularly prevalent among second and third tier banks.
The average marketer of credit and structured products in France made Eu3m-Eu4m, while some make as much as $20m.
"Banks generally in their recruitment criteria are still quite cautious in who and where they hire," Springer said, "but there is a most definite increase in recruitment."
The return of Mike Weston, former global head of debt syndicate, to Morgan Stanley this week is a symptom of a broader phenomenon in which banks ? which axed their headcounts in 2001 and 2002 ? are now anxiously looking for experienced people. Good, experienced traders are hard to come by and the rewards can be high.