AUGUST 12TH, 2011

While no longer available on-line, it provides an idea of the original format and content.

The survey remains available, at no charge to our active clients, and serves as a systemic point of view for the banking industry, when viewed comparatively - on an annual basis.

THIS IS YEAR 10 since the data below was compiled. Its appearance on the internet will be terminated as of September 12th, 2011

TODAY'S DATE: August 12th.2011

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October 30th, 2002

FOREWORD

as seen after 9/11/2001 and previously, during 'Desert Storm'.

We are pleased to present you with the 24^th edition of the our Foreign Bank Salary Survey “AT WAR II: ENDURING FREEDOM” for the period October 2001 to October 2002.

As in every year, the data are gathered and compiled by us and are directly reflective of the market such as we see it via actual searches concluded in the survey period. Although our areas of expertise have traditionally been focused on Corporate Finance and Treasury, we have also included some of the support areas in which we have had direct participation.

This year we look back in horror at the events of September 11^th, 2001. This is a date that changed the marketplace in a unique way, while also bringing to the forefront some similarities to the condition of our market approximately ten years ago.

Our 14^th annual survey (1991) “AT WAR: DESERT STORM” makes reference to a battered economy, a seismic shake-up in consumer confidence and a foreign bank community deeply at odds with this environment. The similarities end here: September 11^th has deeply impacted our community and created changes, abnormalities and contrasts that are unique to it.

In fact the contrast between 1991 and 2001 is striking. In 1991, perhaps because the war was not on US soil, funds flowed into the New York Stock Exchange (NYSE) and the Fed as the result of their both offering a safe haven as well as the lack of suitable investment alternatives elsewhere. By severe contrast, in 2001 as a consequence of the turmoil in the NYSE and extremely low interest rates, foreign flows of funds have decreased dramatically.

This has generated an employment market ‘sui generis’ in both quality and quantity of hirings or dismissals and in compensation terms. Foreign banks, now obliged to observe the Basel Accord, rethink their emergency procedure manuals for branches abroad, keep up-to-date with urgent new legislation and attempt to conduct business, have operated under an unusual amount of stress.

In our quarter century of experience we find ourselves in a marketplace that is entirely without precedent. In light of this, we have outlined below some of the trends we have observed in the last twelve months:

CORPORATE FINANCE

One of the most interesting historical trends we have noticed in the foreign banking community is the changing balance in the relationship between the Corporate Finance and Treasury functions. Up until the current survey period, this might have been characterised as a “Push-Pull” relationship. That is, if a (foreign) bank is divided into the two functionalities, one will generally outperform the other and, as a result, subsidise it. Of course this relationship is in a constant state of flux. Whereas in 1991 this relationship was put on hold for some 18 months and finally became treasury-driven, the situation in 2002 appears to be (after 12 months) in a holding pattern with no runway in sight.

At the same time, we are very pleased to note, that more and more of our clients, in an effort to conduct business ‘as usual’, are joining the ranks of those banks that lead deals. For many of our clients, a main source of income remains participation in the syndication markets of either money centre or European banks.

Foreign Banks have always sought the development of “niche “ business, either related to the home country’s economy or trade-related US business: in fact, trade finance or asset-based lending have proven to be lucrative to the smaller foreign banks and an attractive source of revenue, compared to straight commercial lending, particularly now, that the large US banks have abandoned the quest for middle market business in the former category.

Much as all other banks, money-centre or foreign, the collapse of the ‘dot.com’ et al. era brought about the conclusion, perhaps in more ways than one, that the ‘sudden-wealth syndrome’ had been symptomatic of a ‘bubble marketplace’. This bubble economy developed in the last decade, has now burst.

The large fees, the investment banking ambitions, the multiple base bonuses, all came to an abrupt halt. Certain industries ( such as dot.com or telecommunications ) have morphed into Credit and Credit Work-out with all the ancillary subdivisions.

The lofty concept of Supranational Mergers and Acquisitions has taken an ironic turn and has been performed mostly out of necessity following September 11^th, 2001.

Sadly, some of our clients have severely diminished their presence in the US, either due to conditions described above or because of actual physical destruction of their premises. In very few rare cases, downgradings by the rating agencies have contributed to the tenseness of the environment immediately following 9/11/01.

At the same time, the New York foreign banking marketplace has demonstrated its resilience despite the vicissitudes it encountered.

Searches we have concluded most recently are indicative of this and resonate closely with the existing market conditions. They are in relationship management, credit work-out and derivatives trading, perhaps the only money generating engines of the banks at this time.

Salaries and bonuses have either been stagnant or lowered by the banks. The new ‘executive compensation bonus’ has become a versatile tool in the hands of management, when it comes to adjusting compensation to the current marketplace.

The executive bonus is offered by New York or Home Office Management and may reflect the bank’s overall performance or may be subjective, dependent on each bank’s philosophy and preference.

Private Banking continues to be a category for which human resource demand is high, based on the fact that many large foreign banks consider the affluent Western hemisphere market to be a natural focus of their more sophisticated product delivery efforts. Salaries in this area remain at high levels provided candidates can demonstrate a credible track record as well as a substantial book of business. Foreign banks are cognizant of the fact that private banking offers a stable source of revenue despite the volatility of the economic cycle.

The other area that has demonstrated substantial growth is Risk Management.

In addition to the traditional definition of Risk Management, be it Riskmetrics, RAROC or VaR, which we have addressed over a number of survey periods, Risk Management following 9/11/01 has acquired a new meaning and, apart from its standard characteristics, may be viewed in the context of remote-siting of computer facilities.

Human resources and expenses are allocated to the newly ascending middle office staff, now bearing full responsibility for the configuration of redundant/parallel computer systems in all but a few cases.

Go to Home page (HP) Go to Executive Assignments (EA)

TREASURY (tREASURY)

A general consequence of the consolidation of the foreign (as well as the US) banking community is diminished liquidity. This, in turn, has created some new opportunities for niche business for some of our clients. Most, if not all, are driven by the need to obtain dollar funding in the local money-markets and or the continuation of the search for arbitrage opportunities in relation to the home market.

FX activity, rather diminished by comparison to pre-1999 levels, does continue along after having provided a void now completely oriented towards fixed income products.

Several of our clients have elected to enter or remain active in the ABS (Pfandbriefe) market place for a variety of reasons. Some are interested in the unique characteristics and rates available within the US market place while others are active in exploring, and at times, quite interested in the possibilities of exporting the home country product into the US. Trade finance considerations with the home country or within its sphere of influence have always been emphasised by the Treasury effort. Post 1999, this focus has diminished but not disappeared.

In contrast to past years which have generally witnessed the establishment of more than one foreign bank annually in New York, with the corresponding premium for Treasury personnel with start-up experience that it entails, no new arrivals have been recorded since 9/11/01.

Whatever hiring has taken place during this survey period, has emphasized the need for individuals with demonstrable track records.

No dollar records have been established in compensation terms however.

Proprietary trading is an area that a large number of our clients are choosing to move into the foreground. Precious metals trading has become active once more with certain institutions.

IN CONCLUSION:

*Base salaries for this as well as all trading continue to be relatively modest but typically have a more generous bonus structure (albeit more stringent risk parameters) that affords greater up-side potential to the successful trader.

* Individual profitability has remained a principal goal of anyone currently employed. Base salaries, in general have declined by as much as 12% while bonus opportunities have moved from a fraction to a multiple of that base to encourage performance.

* The bonus, is typically based either on an individual/team P&L or a bonus accrual pool that embraces all members of the operation. The format of the bonus payout includes a cash component and in some cases, either the ability to obtain deferred compensation or, quite rarely, equity participation in the bank.

*As is the case with senior expatriate corporate bankers, some treasury officers also require that the compensation package include enrollment in the home country’s pension scheme.

*After a series of unprecedented events in 2001, it is not unreasonable to assume that the US and foreign banking community are in a period of transition. In addition to the economic dislocations caused by 9/11/01, a series of unrelated but critical events have impacted the economic climate.

* To some extent, the current environment in the US is reminiscent of the well-known “bubble economy” phenomenon in evidence a few years ago in other countries, to which must be added an on-going series of scandals encompassing corporate, auditing and banking practitioners as well as their clients.

*The historical trends noted in our previous salary surveys continue to influence the current environment. Consolidation continues apace within the global banking community in some cases guided by the central monetary authority and in some cases driven by market conditions.

*The perennial question of whether or not to buy or grow market share in either Corporate Finance or Treasury is an issue which most of our clients have not taken a specific position on: no consensus in this area has emerged.

*As a result of the foregoing, niche business opportunities are proliferating and the push to develop fee-based revenue will continue to influence foreign banks to exploit those niches.

*The supply of seasoned banking executives is particularly strong in New York, a trend that has generated selective hiring in recent months, given the discounted nature of overall compensation levels.

We anticipate these two trends as continuing to influence the market place in the foreseeable future and take this opportunity to welcome our new clients and wish continued success to all.

Danelle Dann

The First of March 2003