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Time to settle for a pay cut in office

Mumbai, Sept. 16: Investment bankers in India — once regarded as the glory boys of the financial services industry — are bracing for pay cuts this year.

After grabbing top-dollar salaries and hefty annual increments and bonuses, the reality of the business downturn has started to bite.

The collapse of Lehman and the loss of the independent identities of Bear Stearns and Merrill Lynch through separate mergers have skewered all hopes of fat pay hikes.

“No economy can remain immune to the crisis in the US and a reaction will be felt everywhere. There is going to be a negative impact on Indian companies: they will go slow on hiring, scrap sign-on bonuses and pare performance incentives,” said an analyst at global human resources consulting and outsourcing firm Hewitt Associates.

According to Hewitt Associates, salaries in the banking and financial services sector jumped 16.4 per cent in 2007, a double-digit growth rate three years in a row.

Investment bankers, who claimed whopping sign-on bonuses and negotiated comfortable severance packages until the other day, will now have to settle for lower basic salaries as well.

“The market has slowed down over the last six months. Sign-on bonuses have been non-existent for the last three months. Nobody wants investment bankers and recruitments have been frozen. There is a lot of talent floating around but deal-making is down to a dribble. These candidates have to settle for smaller pay packets,” said an HR professional requesting anonymity.

Plagued by the dwindling business, firms such as Goldman Sachs and Edelweiss have started cracking down on non-performers, an industry insider said.

One I-banker summed up the situation succinctly. “I have given up all hope of a performance bonus this year. But there is also a feeling of immense relief. At least, I have my job. The idea is to just ride out this crisis,” he said.

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