Mumbai: The salaries of foreign exchange traders in India are expected to jump by up to 30% this year as the rising rupee stokes demand for hedging services and trading volumes swell.
Some traders are now earning as much as their counterparts in Asian centres like Singapore, and keeping experienced staff is increasingly expensive. Banks face turnover of up to a fifth of staff each year.
“Retention is the name of the game. Banks don’t mind paying heavily for it. Treasury is making so much money that they don’t mind sharing a bit of the profits,” said Tzeitel Fernandes at human resources firm Hewitt Associates.
India’s annual foreign exchange market turnover has grown to a gross $6.5 trillion in the fiscal year 2006/07 from $1.4 trillion six years earlier.
“Volumes flowing through the system are much more than last year,” said Hitendra Dave, co-head of global markets for treasury at HSBC in India.
Dave guesses salaries have at least doubled in the past 12 to 18 months, while treasury revenues for the industry have doubled in the past year.
More commercial banks are offering treasury products to their corporate clients, whose overseas exposure is increasing as India’s economy opens up, and foreign banks that are boosting operations in financial centre Mumbai are willing to pay more for talent.
Global houses like Credit Suisse, Lehman Brothers and Goldman Sachs have been ramping up in India and hiring experienced treasury sales and dealing staff. The new arrivals often don’t train staff up themselves, they buy experienced talent, senior traders say.
“I lost a lot of people last year, but the bank is getting wise to the fact it’s silly to lose people -- that you have to do all you can to retain them,” said one head of trading at a foreign bank that has been in India for several years.
Beating the traffic
Traders say the average annual salary for a middle manager in treasury at a private sector or foreign bank is between Rs1.5 million and Rs2 million (US$37,000-49,500). That’s excluding bonuses, which can add another Rs8 million, nearly $200,000.
That’s still below Hong Kong, where middle-ranking foreign exchange traders pocket $220,000-300,000 a year, including bonus. But it’s near or exceeding levels in Singapore, the world’s fourth-largest currency trading centre, where traders earn about S$100,000 ($66,000) a year before sales commissions.
In London, big bonuses often mean new sports cars or diamond pendants. But Mumbai’s traders use their new-found wealth to beat the traffic and upgrade their homes.
One senior currency trader, who moved from a private sector Indian bank to a foreign one, used to commute for an hour and a half on the city’s overflowing trains. After a big bonus last year, he has a Honda City sedan and a bigger apartment just half an hour’s drive from his office.
The advent of private equity and venture capitalists has also taken a toll on employers’ wage bills and staff turnover.
“It’s a huge drain in talent on treasury, which has contributed to the rise in wages and attrition,” Fernandes said, adding banks were getting creative to retain staff, offering them equity, deferred bonuses and overseas postings.
Some banks also train up B or C teams.
“We always have people sitting on the bench,” said a senior trader at an Indian bank. ICICI Bank , India’s largest private bank, says its treasury team has grown by 63% since March 2006, on top of a 60% expansion in the 12 months before.
Seasoned market players doubt the boom times will last.
They expect consolidation between local banks as a central bank regulatory review nears in 2009. Others think the sector will see an influx of talent attracted by the high pay, eventually forcing down wages.
For now, the only way to do business is to pay up.
“The rate of growth in salaries has to slow -- that’s a fact -- but it will continue rising for a bit, at least till local compensations close in totally with the rest of Asia,” said the head of trading at a foreign bank.