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Derivatives

Firm Expansion To Bolster Demand For Credit Staffers

Firms such as Deutsche Bank, Merrill Lynch and ABN AMRO want to expand credit origination and sales next year by 20% and that is feeding speculation about remuneration topping this year's bumper round.

Firms such as Deutsche Bank, Merrill Lynch and ABN AMRO want to expand credit origination and sales next year by 20% and that is feeding speculation about remuneration topping this year's bumper round.

The Options Group predicts bonuses this season will be an average of 10-15% higher in credit derivatives, reaching USD1.5-2 million for managing directors in sales and between USD1.7-2.2 million for managing directors in trading and structuring. For structured credit, the group is tipping a rise of 15-20%, meaning payouts of USD2.5-3 million for managing directors. A poll by search firm Credent Partners forecast the highest increases at associate and v.p. levels, with each looking to average up to 81% more than last year, followed by managing directors. "It's looking very bullish for 2007," said Alex Tracey, partner at Clifden Partners in London. "It's all advanced orders and headcount expansion."

The expansion of the credit business to include derivatives on asset-backed securities and loans is partly driving the need to add to headcount. Richard Whittle, global head of exotic credit trading at ABN AMRO in London, said the firm will be broadening the scope of exotic structured credit to include more loans and ABS. He declined to specify numbers, levels or timeframes for the additions. Officials at Deutsche Bank and Merrill also declined to give detailed figures for headcount increases.

New regions and investors opening up to credit derivatives is also contributing to the need to increase headcount. Structurers noted increasing interest from Eastern Europe in particular and a number of firms, including Calyon, are adding sales staff to target those regions.

In Asia the remuneration story is even stronger, with one recruiter predicting a 30% increase on last year. Firms in the region are trying to ensure they retain staffers as they expand and begin to set up new divisions, he added.

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