Terra Firma founder Guy Hands has never been the conventional type. But now he has gone way off the beaten track: not only has the private equity giant cut graduates' salaries in half – but it's offered to buy them a house instead.
EFinancialCareers reported Terra Firma has cut starting salaries for those joining its graduate programme to £35,000 – that's half what they were – and has scrapped cash bonuses altogether.
However, at a conference yesterday Hands reportedly said: "We'll pay for a deposit on a house in London – 40 per cent of the average cost of a house in London – in a good area."
Bearing in mind figures published yesterday showed house prices in the capital are edging towards £500,000, that's a big commitment. Although the fact he is saving £35,000 a year on each salary as well as whatever the company paid in bonuses, it may be a shrewd move.
Terra Firma isn't the only City institution looking to cut the amount it pays out in bonuses: at the beginning of this month it emerged UK lenders are planning on slashing bonuses this year, with the number of bankers receiving a so-called donut bonus – that's zero – almost doubling in December from the year before.
However, those working at US lenders are set to do rather better, said Alice Leguay, co-founder of salary benchmarking site Emolument.
“US banks continue to be more aggressive when it comes to paying bonuses versus European banks.
"It is a cultural factor – to strongly incentivise employees – as well as due to the simple fact that they tend to bring in more fees and are therefore able to spend more on their bonus pool."