Cheap Vodka and Fat Salaries For Russian Bankers

Managing directors at Moscow's banks now rake in $7 million and more in yearly compensation, Bloomberg News reports.

This is bound to make their New York counterparts -- who are already used to their $3 million payouts being dwarfed by private equity and hedge fund comp -- feel like they've been bumped yet another rung down on the prestige ladder.

Consider it hardship pay. A hot market for I.P.O.s and merger advisory has created an overwhelming talent shortage at Russian banks as well as in the Moscow offices of U.S. entrants. Employers are looking for Western-trained, Russian speaking managers - ones that might not be inclined to leave their commodious Greenwich compounds for cold, bleak Moscow without a sizeable pay bump. And let's face it, taking on the risks associated with the corruption in Russia probably deserves every bit of the premium pay. After all, bankers here in the U.S. don't usually fear for their lives after a business deal gone bad.

Bloomberg quotes a Russian executive recruiter named Igor Shekheterman as saying that before Russia's economy started on its growth spurt, Moscow banks used to simply recruit "former spies and politicians" for MD positions. In a new and sophisticated world of $10 billion oil I.P.O.s, those hiring practices were no longer cutting the mustard.

So now investment banks are willing (and at least for the time being, able) to lure American bankers with $7 million to $10 million offers. The pot is further sweetened by Moscow's13 percent taxation rate, which blows after-tax income in New York and London out of the water. Banker compensation in Russia is up a startling 25 percent for the year.

But beware that Moscow might not remain the land of golden opportunity for long. Some believe that the period of big stock market gains is coming to a close and that investment banks won't be able to afford these outsized pay packages for much longer. Many also think that economic stability is in jeopardy as Vladmir Putin prepares to leave office amid deteriorating relations with the U.S. and Europe. So, don't start packing your long underwear just yet.

by Liz Gunnison

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