Endangered Bankers Look To Rating Agencies

  • 29 Jul 2001
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The two major ratings agencies have seen a sharp spike in employment inquiries in recent weeks, with many coming from the biggest users of their information: The New York dealer community. Brian Clarkson, asset finance group chief at Moody's Investors Service, says he is getting more resumes and calls than ever before from Street bankers seeking ratings analyst positions. Clarkson received 500 resumes recently from an ad Moody's placed in the Wall Street Journal, 50 of which came from people at different levels of investment banking. "We used to get only a few inquiries from bankers, but with the recent downsizing seen on the Street, we get more and more of these calls everyday," notes Clarkson. "This is a higher than usual ratio," he notes.

The same trend is being seen at Standard & Poor's. Pat Jordan, the global ABS/RMBS group chief, says "We've seen more resumes from investment bankers at junior or mid-level [positions]." She notes that she typically gets resumes from bankers whose compensation is around the $100,000 mark, mostly from junior bankers, but also from a few traders. Jordan adds that most of the jobs being sought are for associate director or director level positions. Both firms acknowledge seeking hires, especially in the mid-level range, and particularly within the structured-finance areas.

The compensation structure of ratings agencies is apparently one of the driving forces behind their sudden popularity. With Street compensations being based 50-60% on bonuses, and many firms cutting back on guarantees or having potentially lower bonus pools for mid- and junior-level staff, it makes sense to seek a higher base salary. One recruiter compares the associate director position level (S&P's title) with the equivalent Street job. He says that a banker making $160,000 annually in total comp--a $80,000 base and a $80,000 bonus--may switch to a rating agency job where the bonus is only 20% but the base can be as high as $100,000 to $120,000. At a more junior level, the trade makes even more sense. An assistant v.p. at Moody's makes $80,000-$90,000 in salary, with a potential for $15,000 in bonus, which the same recruiter compares to a mid-level banker who might earn total comp of $120,000, with only $60,000 coming from salary.

But even on Wall Street, money is not the only factor at work. Many analysts prefer rating agency jobs because of a perceived better quality of life. Eun Choi, an analyst at Moody's who worked on the CDO desk at Chase Securities, says that, "At Chase, I used to pitch deals. Here I am more in the observer's seat. Of course I make less, but I don't have the pressure to get the business." Moody's Clarkson says even though rating agency analysts can work long hours, there is a commitment to schedule flexibility, allowing analysts to tend to personal issues if needed. He cites the example of one of the seven managing directors who report to him, Linda Stesney, who works part-time, three days a week. As an ex-S&P executive puts it: "If it's your birthday and you work at an agency, you get to have a dinner with your wife. If you're a banker, you're not having dinner with your wife."

Finally, freedom of speech is invoked by Douglas Lucas, an analyst who heads the CDO research team at J.P. Morgan Securities and who used to work at Moody's. He reasons that "You get paid for expressing your opinion. There are not too many jobs where that is true."

  • 29 Jul 2001

GlobalCapital European securitization league table

Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Bank of America Merrill Lynch (BAML) 7,026 25 11.95
2 Citi 6,449 21 10.96
3 BNP Paribas 5,093 18 8.66
4 Barclays 4,040 11 6.87
5 Lloyds Bank 3,615 14 6.15

Bookrunners of Global Structured Finance

Rank Lead Manager Amount $m No of issues Share %
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1 Citi 1,505.59 4 20.86%
2 SG Corporate & Investment Banking 1,292.64 1 17.91%
2 Rabobank 1,292.64 1 17.91%
4 Wells Fargo Securities 760.56 2 10.54%
5 BNP Paribas 598.25 2 8.29%