Bankers' salaries will likely grow at the fastest rate in Asia Pacific this year, rising by twice as much in the United States, according to an industry survey, cementing the region's reputation as one of the hottest but costliest markets to hire in.
Elsewhere, including in Europe, salaries across the financial sector are also likely to rise in 2012 but at much slower rate than in Asia and not for bank chief executives, a survey by human resources consultancy Mercer forecast.
Banks with an Asian focus, such as HSBC and Standard Chartered, were hit by rising wages bills last year from expanding in the region, though strong growth there did boost revenues. Standard Chartered registered a 15 percent rise in staff costs as it competed to hire and retain executives.
Mercer found that in Asia, financial services salaries were set to rise 5 percent on average in 2012, while in the United States the pay hikes would likely reach 2.5 percent and in EMEA 2 percent.
The group surveyed 63 firms in December 2011, the bulk of which were banks. A quarter were insurance companies. Most of the firms it contacted in Asia Pacific were based in Hong Kong, Australia and China.
Base salaries were historically never a big part of investment bankers' compensation packages, but after a post-financial crisis crackdown by regulators in Europe on bonus structures, base pay has risen dramatically.
At many top investment banks, salaries doubled after 2009, with senior executives getting up to 300,000 pounds in base pay, according to headhunters and bankers.
This has made salaries a much more important factor when it comes to retaining and recruiting staff, and international banks in Asia for instance compete with local firms on this basis.
FEW BONUS CHANGES
Still, bonuses remain a big focus for regulators, politicians and the media, with banks in the UK still under intense pressure to rein in rewards after several lenders were bailed out by taxpayers in 2008.
Bonus structures have been overhauled, with big chunks deferred and paid in shares rather than in cash up front.
Half of the firms surveyed by Mercer said they did not plan to change bonus designs in 2012. Those that do said they would review the performance measures awards are based on or introduce conditions upon which bonus can be clawed back - a feature banks are only just starting to use.
Lloyds and HSBC were among those that clawed back bonuses this year in connection with mis-selling incidents.
But although payout structures have changed, the size of rewards is still a contentious point, particularly in Europe, even if most investment banks, hit by turmoil in the euro zone last year, slashed bonus pools for 2011.
According to Mercer, only 10 percent of firms looking at bonus changes said they were considering reducing the maximum payouts in their annual bonus plans. Banks can sometimes restrict how big a bonus is versus base pay, and tighten the criteria.
But the ratio of bonuses to revenues and bonuses to pre-tax profits did fall from 2010 to 2011 at the banks that responded to Mercer's survey.
The majority of financial services firms also do not plan to change their long-term incentive plans, Mercer said.
Staff in so-called control roles - such as in risk management, audit and compliance - are likely to receive the biggest average pay rises in 2012, the report added. These staff could get pay rises of more than 3 percent.
These roles have gained prominence as regulators have cracked down on banks and scrutinised rewards for key risk-takers.
(Reporting by Sarah White. Editing by Jane Merriman)