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Originally Posted by Unregistered
Fee structure duh. I thought the answer would've been blindingly obvious.
IB charges fees on a combination of retainer and success fees, normally expressed as a % of the deal value.
Lawyers overwhelmingly charge on the billable hour. There's only so much you can bill because there's only so many hours you can work in a day.
You're comparing apples and oranges.
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This isn't entirely true as well. Even though IB charges fees as a % of deal value, they are still significantly lower across Asia (especially SG) vs US/EU. Just take a look at the annual report of any investment bank that breaks out their IB revenue. Asia tends to have one of the strongest growths but are nowhere close to what you see in the US/EU
Quote:
Originally Posted by Unregistered
Based on your logic, investment bankers and sales & traders should be getting depressed wages as well. They too fall into the tertiary services industry and face the same environmental constraints that you mentioned.
So why is it that they are earning New York benchmarked salaries (85k USD equivalent == 120k SGD, roughly 10k SGD per month base) in the lacklustre Asian market? What is the structural differential between banking and law that is prevalent here?
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Investment bankers in Asia get paid similar BASE salaries to their counterparts in the US/EU. However, on the BONUS component (which you'll find constitutes 50% or even more of total comp), they get paid significantly less. Bonuses are tied to deal flow: if you don't bring in/transact deals, there's a smaller bonus pool to get paid from
Reason for the similar BASE salaries is because you still need to attract top tier talent to work in an ibank. The type of work you do in Asia is similar to what you would do in the US/EU (and not always less complex), and would require long hours. If you do not offer those salaries, no one would be willing to pull all-nighters for you. Probably apt to also point out that although 10k SGD per month sounds like a lot, on a per-hour basis you're getting paid less than an average fresh grad raking in 4k SGD per month
Another thing that no one seems to have pointed out is that the environment for investment bankers is getting worse as well - it's not just restricted to law. Given that the wallet size (or potential deals you can bring in) in Asia are shrinking, a lot of ibanks have been downsizing (cutting teams); this can be seen in both SG & HK. Whilst bankers used to get housing allowances (something like 25k HKD per month for associates in HK) on top of their base salary & bonuses, this has been cut drastically or removed altogether.
Like the Big 4 local firms, banks here face increased competition from other foreign banks as well (predominantly SOE Chinese banks) that can undercut fees to gain market share. The amount that they undercut by is staggering (below cost at times), which means banks can ill afford to pay decent bonuses at all to local bankers.
Bottom line: it's tough everywhere you go, regardless of whatever profession you're in.