'Rules and regulations are killing this business'.
Thirteen years after Credit Suisse crowned itself Wall Street’s new junk-bond king by buying Donaldson Lufkin & Jenrette, the last vestiges of its reign in the most-lucrative credit business are being squeezed out by post-crisis banking regulations.
Bloomberg reports that at least six senior members of the firm’s U.S. credit team have departed its New York office this year as top pay for high-yield debt traders and salespeople fell to about $3.5m in 2012 from as much as $5m three years earlier, according to two people with knowledge of the matter.
The bank has scrapped monthly commissions it had paid as part of efforts to retain a DLJ junk-bond team led by an associate of Michael Milken, who created the market in the 1980s, the people said.
The exits underscore how regulations worldwide from bank capital standards to the U.S. Dodd-Frank Act’s Volcker rule are prompting Wall Street to cut compensation for corporate-debt traders who were among the biggest risk-takers before the market turmoil leading to the financial crisis that started in 2007.
The traders are poised to earn 8.3% less in 2013 than they did seven years ago, with a vice president-level salary declining to an average $366,000 from $400,000, according to New York recruitment firm Options Group.
'Rules and regulations are killing this business,' said Michael Maloney, president of headhunter Maloney Inc. 'The new Dodd-Frank rules and regulations and everything that’s happening in the industry are forcing banks to re-address compensation and risk profiles.'
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image: © Emmanuel Huybrechts