Disruption is coming to Paris, and not just in the form of the yellow vest protestors on the streets. As banks move staff from London to the French capital because of Brexit, employees at French banks are eyeing-up their existing pay packages and deciding they might be better off elsewhere.
"I'd like to find out how much I can get at these other banks," says one senior trader at a French bank in La Defense. "Places like Deutsche Bank and Credit Suisse already pay a lot more in Paris. The U.S. banks seem to have a plan for paying to attract people and the French banks are just waiting to see what happens. - They're worried, they know the U.S. banks pay well."
As we reported earlier this week, Bank of America is asking the 200 or so of its front-office employees who move to Paris to accept the redenomination of their salaries from sterling to euros, and is rebasing their new euro salaries to match the local market.
Even so, Parisian headhunters say international banks are paying considerably more than the locals. "The French banks like Natixis, BNP Paribas CIB, Credit Agricole CIB, and SocGen CIB have always paid under the market level of international investment banks and boutiques," says one local corporate finance headhunter, speaking off the record. "At Lazard, for example, you'll get around €160k as a vice president," he says. "At Credit Agricole it will be closer to €110k to €120k."
Never slow to spot a gap in the market, headhunters who previously focused on London are reorienting their focus towards the French capital. One says that both Credit Suisse and Deutsche Bank are among the big payers in Paris. As we reported yesterday, Credit Suisse is rumoured to pay some of its Paris-based MDs salaries alone of €400k. By comparison, one London headhunter claims that director-level pay (a notch below) at French banks in Paris tends to be capped at around €150k.
For French banks this presents a clear and present danger. As Bank of America, J.P. Morgan, Goldman Sachs and others target Paris for their EU operations post-Brexit, French rivals represent a handy repositary of cut-price local staff for when their London employees decline to move. One London headhunter who works with French banks says they're well aware of this and are wondering what to do.
The obvious answer is to raise salaries. However, French banks like BNP Paribas and SocGen are currently in the proccess of cutting costs and will not want to add them in the form of higher basic pay. Even so, one Paris headhunter says BNP did hike first year associate salaries to €100k last year in an effort to stave off international competition. BNP declined to comment for this article.
French banks' best hope might be to compete on the basis of lifestyle and a different pace of work. Wall Street Oasis' ranking of banks' working hours suggests SocGen bankers put in around nine hours per week less than bankers at Bank of America Merrill Lynch.
Claude Calmon, a headhunter focused on France at search firm Dartmouth Partners, says French banks have a different culture. “French investment banks are closely aligned to French corporate banks, from which they derive a lot of their business. It’s a different set-up to most American banks, and it means that employees of French investment banks accept lower pay in return for greater stability.”
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