The pay figures are only half the story

THERE is little doubt that competition for talent in financial services remains as fierce as ever. But that is naturally being reflected differently in the dynamic growing economies of the world versus the sclerotic old world.

Consultancy group Mercer reports that execs in Asia can now expect a real-terms pay rise of more than double that of their rivals in Europe and twice their American counterparts.

The disparity is likely to be even more stark than Mercer’s research suggests, because it excludes pay freezes, which have become rather popular in Europe of late.

European financial services firms have also been trimming pay for several years and are more likely to have deferred pay plans vesting now from fatter years, inflating their remuneration figures.

In Asia, many banks are still going on hiring binges, with runaway inflation driving up costs – as is consistently reflected in financial results for lenders like HSBC.

But as costs rise in Asia, revenues don’t necessarily follow: Dealogic published data last year showing that revenues had actually fallen for investment banks in Asia.

But there are two key differences: in Europe and the US, financial services firms are boosting pay the most for “control” and “risk management” functions. They are also hiking base salaries while trimming bonuses due to regulation. Whereas in Asia, firms can lure execs with large bonuses and then cut costs more quickly if they don’t bring in profits.

There is at least one financial sector growing faster in Europe than Asia however: regulation.