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(bloomberg) A new generation of Wall Street bankers is about to get a raise, as firms open wallets to head off defections to investment funds and Silicon Valley.

Bank of America Corp. plans to boost salaries by at least 20 percent next year for junior staff in trading and investment banking globally, while Goldman Sachs Group Inc. increases salaries for junior U.S. workers by about that much, according to people briefed on the decisions. JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) are considering similar plans, people with knowledge of those deliberations said. Morgan Stanley also decided this year to raise salaries for some mid-level bankers.

Wall Street firms have cut hours and improved conditions for junior bankers to stanch the loss of talent to competitors such as private-equity firms and hedge funds, and to technology companies whose stocks have soared. Charlotte, North Carolina-based Bank of America also is among investment banks that have encouraged analysts to take time off on weekends.

“These firms want to hire the smartest of the top grads, that’s part of building for the future,” said Paul Sorbera, president of Alliance Consulting, a New York-based search firm. “They’re competing with tech firms that are a little sexier than finance to the younger generation.”

Photographer: Davis Turner/Bloomberg
Charlotte, North Carolina-based Bank of America also is among investment banks that… Read More
Bank of America is boosting fixed pay for summer associates who have been asked to join the company around August 2015, said the person briefed on the move, requesting anonymity because it hasn’t been announced publicly. Some new employees already working there also will get raises, while bonuses remain variable, the person said.

Citigroup’s Review

JPMorgan is likely to increase salaries by at least 20 percent for some junior employees, the person familiar with its talks said. Citigroup is weighing a potential salary increase of about 20 percent for analysts and associates, and the New York-based firm hasn’t yet decided what regions would be covered, the person with knowledge of its discussions said.

Investment funds are more aggressively poaching junior bankers who’ve already been vetted and taught the basics at big Wall Street banks. While that strategy stretches back decades, the approaches are starting even earlier in the novices’ careers and have come as banks struggle to keep costs and compensation down.

“There is a lot of competitive pressure for them when they are losing young junior talent that they have trained to private-equity firms and to each other,” Michael Karp, chief executive officer of recruitment firm Options Group Inc., said of banks in a phone interview. “They can’t pay huge amounts of bonuses as they have in past years.”

Crisis Fallout

The financial crisis weakened banks’ footing. After 2008, firms slowed hiring while overhauling pay packages for top earners, emphasizing salaries and deferred bonuses to discourage risk-taking for fast rewards. That’s now contributing to staff shortages and compensation tensions in the low and middle rungs of some companies, Sorbera said.

“They have a lot of senior people, and they haven’t been building the rank and file very much in the last five or six years,” he said. “They may just also be doing some catchup in salaries. We’ve already seen that with the more senior people, where salaries have really gone up and are a greater portion of comp.”

Morgan Stanley (MS) is raising salaries about 25 percent for associates and vice presidents in its investment-banking and underwriting units, a person briefed on its decision said last month.

Weekend Relief

Goldman Sachs’s raises apply to employees in all divisions with the title of analyst, typically recent college graduates, said the person with knowledge of its plan. The move won’t affect bonuses, which are based on the firm’s and employees’ performance.

Goldman Sachs’s salary increases will bring some first-year analysts’ annual base pay to about $85,000, the person said. Such employees typically receive $70,000 to $90,000 in salary, with bonuses bringing total compensation to as much as $140,000, according to New York-based consultant Johnson Associates Inc. The junior-banker title doesn’t refer to research analysts who recommend stocks to investors.

In 2012, Goldman Sachs decided to stop offering two-year contracts to investment-banking analysts, instead making them full-time employees from the start. Last year, the New York-based firm discouraged them from working weekends and pledged to hire more junior workers to prevent overloading.

Goldman Sachs set aside 37 percent of revenue for pay last year, down from 38 percent in 2012 and 42 percent in 2011. The ratio was 43 percent in the first half of 2014, the same as a year earlier.

(Dealbreaker) Summer associate IBD interns at JPM, BALM, GS, and Citi received full-time offer salaries this week of 125k. This is in response to MS raising associate/vp salaries across the board.

(Paul Clarke – efinancialcareers) Alexey Loganchuk glanced around the trading floor at JPMorgan after over five years at the bank and realised everyone was a little too similar. Investment banks’ ‘cookie cutter’ approach to recruiting graduates means that students with great academics from top schools, with internships and the ‘right’ kind of extra-curricular activities are the only ones that get hired.

Loganchuk hardly deviates from this mould – he has a degree in finance, statistics and international business from New York Stern – but the lack of diversity in the financial sector was an ongoing concern. “My frustration with the lack of meritocracy in financial services dates back to my time in college. As a student, I saw many of my most capable peers struggling to find opportunities at bulge-bracket banks,” he says. “That frustration only deepened over the course of my time with JPMorgan. I felt that the finance industry’s singular focus on resumes was something that needed to change.”

The problem is that the people who excel academically aren’t always the people who make the best traders, advisors or investors, he says. Banks, hedge funds and asset managers set the bar so high, but they have no way of assessing who can actually perform. Five years ago he quit banking to set up Upgrade Capital, a firm which arranges events pitting students from various universities against one another in trading and investment competitions, and then connecting the top performers with hedge funds and investment banks. The point, he says, is that it’s down to how you perform, not how high your GPA score is or who you know at, say, Goldman Sachs.

“Through the linear application of hard work, these people get into top universities and earn top grades – but they often end up lacking the business acumen and creativity necessary to add real value at banks and hedge funds,” says Loganchuk.

Upgrade Capital has partnered with Fortress Investment Group to provide its ‘Macro University Challenge’ and Loganchuk it also working with other hedge funds that he can’t name. Last year, around 1,400 people took part in its competitions across 27 universities and he expects a 50% uptick in 2014.

The list of ‘core universities’ on Upgrade’s books isn’t exactly targeting low-end students. Yale, Harvard, Brown, Princeton, Stanford, Columbia, Brown and most Ivy League colleges are all working with the group. But then so are the University of Missouri, Texas A&M and Georgia Tech, which don’t have investment banks swarming the campus.

“Right now, a lot of how banks and hedge funds recruit comes down to what college you went to and what your grades were. We are trying to make it so that young people are hired strictly based on their ability to add value,” says Loganchuk.

Doing well in one of these competitions won’t automatically mean a job in a hedge fund or an investment bank – Loganchuk is keen to point out that Upgrade is not a recruitment agency – but it will open doors to people and organisations which may have previously junked your resume without a second thought.

“We look at students on our platform who can generate alpha, and then engage them offline to examine the thought process underlying their investment decisions. These students ultimately interact directly with hedge fund analysts and portfolio managers. Not only is it a great learning opportunity for students – it is also a way for them to build invaluable connections in the industry,” he says.

(Bloomberg) — Oppenheimer & Co. hired three people from Sterne, Agee & Leach Inc.’s fixed-income sales team, according to a person with knowledge of the moves.

Edward LaScala, Chris Sanford and Paul Cappelli started last week on Oppenheimer’s credit sales team in New York, focusing on investment-grade corporate bonds, said the person, who asked not to be identified because he isn’t authorised to speak publicly on the matter. The team reports to Peter Albano,
managing director of fixed-income sales. LaScala, Sanford and Cappelli declined to comment.

Prior to joining Oppenheimer, the team spent a year working on Sterne Agee’s sales group after working together on Citigroup Inc.’s institutional credit sales group. Oppenheimer hired LaScala as a managing director, Sanford as an executive director, and Cappelli as a director, said the person.

LaScala joined Citigroup in 2007 after 23 years at various firms on Wall Street, including Salomon Brothers Inc., Credit Suisse Group AG and Societe Generale SA. In addition to sales,
he’s worked in credit trading, origination, and syndicate positions, according to an August 2013 statement on his hiring at Sterne Agee.

Sanford joined Citigroup after four years at Delaware Investments, which oversaw $400 billion in assets as of March 31, and where he began his career in 2008 and traded industrials, bank and finance positions. Cappelli worked at HSBC Holdings Plc as a foreign exchange analyst for one year before
joining Citigroup in 2005.

Goldman Sachs Group Inc. (GS), this year’s top-ranked takeover adviser, hired Paul Parker to be a co-chairman of its mergers and acquisitions group less than three months after he left Barclays Plc. (BARC)

Parker, 51, served as global head of finance at London-based Barclays before being named to run the worldwide mergers and acquisitions in October. He decided to leave in May after a reorganization of the bank that prompted the departure of Hugh “Skip” McGee, who ran the business in the Americas.

At Goldman Sachs, Parker will be co-chairman of the M&A group with Tim Ingrassia and Jack Levy, Michael DuVally, a spokesman for the New York-based firm, said yesterday. The post is a senior position dealing directly with clients. Gregg Lemkau and Gene Sykes are the group’s global heads, running the business.

Banks have been hiring in corporate finance amid a 71 percent surge in M&A to $2.6 trillion this year, according to data compiled by Bloomberg. Goldman Sachs, JPMorgan Chase & Co. (JPM) and Citigroup Inc. saw their combined revenue from investment banking rise 6.7 percent to $9.17 billion in the first half of 2014, led by gains in equity underwriting and advising on mergers.

Parker joined Barclays through the British bank’s purchase of Lehman Brothers Holdings Inc. North American operations out of bankruptcy in September 2008 after talks to acquire all of the New York-based firm collapsed.

The Financial Times reported Parker’s appointment earlier yesterday.