LATIN AMERICA - Banks in Latin America are expanding their teams of risk professionals, and are paying up to do so, as they get to grips with Basel II and a rapid expansion in credit that demands focused control on risk allocation. Recruiters predict this trend will continue, as banks enter new areas that demand new skills, and that further pay rises are in the offing.
The past 12 months have brought an increase in pay for most Latin risk professionals. In the regions largest market, Brazil, salaries have increased by 20-30% over the year and team leaders at mid-sized banks can expect salaries of US$190,000 a year, with a further 50-80% in bonuses.
A confluence of factors has spurred the changes, says Renato Furtado, executive director at the Sao Paulo office of recruitment firm Russell Reynolds. One such factor has been preparations for Basel II. Banks are taking in-house professionals who have been with the firm for many years and re-dedicating them to this area to check their processes and procedures are correct. Some large international banks are also scouting for additional staff from outside the firm to boost the local operational risk team, although these banks typically have centres dedicated to complying with Basel II in London and New York that can train, advise and co-ordinate in this area, he says.
Because many hires are for newly created positions, there is an overall shortage of talent, which means banks are having to be flexible about the background of the hires they make. The market is very shallow compared with London or New York. In the end, we have to look for professionals who, if they dont have the ideal profile, can try to make it work, says Furtado.
Pressures for risk professionals are coming from other sources, too. The expansion of consumer and small company loans has triggered a demand for analysts with skills in both sectors. At the same time, the growing use of capital markets with, for example, equity initial public offerings and securitisation of loan portfolios, has stoked demand for risk analysts, says Furtado. While clearing banks are keen to stock up with talent to oversee credit and operational risk, many such professionals have been lured to investment banks for the higher pay.
Middle-market banks have been particularly active in recruiting risk professionals, as they focus on markets that have not yet been exploited by the big banks, according to Ademar Couto, director of financial services at Ray & Berndtson, Brazil. These banks are particularly interested in areas such as agriculture, which are booming because of high food and commodity prices, but they need teams to understand these business areas, he says. The typical team size in risk management is also increasing, from three to four and up to six, he notes. These mid-sized banks are often poaching staff from larger banks, which then need to seek replacements.
Finally, the massive growth in project finance as Latin America upgrades its creaking infrastructure is starting to create the need for analysts with expertise in this area. This, again, is calling on the limited pool of risk professionals, says Furtado.