Street’s empty: The party is over, at least for now

If ESOPs Were The ‘In-Thing’ Last Year, It’s A Word That’s Conspicuous By Its Absence Today; Foreign Broking Cos Go Slow On Hiring Plans Too

Ramesh (name changed) is a sub-broker with a brokerage house in Mumbai. In 2006-2007, he did not miss one trading day. This enthusiastic 32-year old would dutifully take the over-crowded Mumbai trains which would help him get to work in Dalal Street at 9 am.
Much before trade commenced, he was quick to catch up on what was going on and keep his clients updated. On a good day, his brokerage earnings would be in the range of Rs 8,000-10,000. The indication of how tough the going has been is evident from the fact that this is drastically down to Rs 500, and with some luck to Rs 1,000. Time is spent aimlessly looking for a new game on the PC since solitaire is now passé. Once lunch is done, Ramesh takes a long walk along Marine Drive wondering how he could possibly get past the 10-orders-per-day mark. Luckily for Ramesh or unluckily, there are a lot like him in today’s market.
For instance, a wealth manager with a private sector bank who earned a bonus of Rs 20 lakh last year is struggling to meet his quarterly target, this year. Around the same time last year, he found the discotheque a good way to loosen up. That is far from the case today, with an outing itself becoming a rarity. Last December, plans were afoot to buy that dream house till the market had other plans in store for him.
If ESOPs were the in-thing in 2007, it is a word that is conspicuous by its absence today. Employees at brokerages who are rewarded with this magic wand last year realise today that the market price is way below the offer price. “Since the going was good, while calculating my salary, I valued the ESOPs, and hence rejected an offer from a foreign bank, laments one such ESOP holder. Private sector bank employees working in affluent segments such as treasury and wealth management would earlier take their bonus and promptly look for the next big job offer. One employee who resorted to such hopping twice in the past three years, confirms he has no offer this year. Hit by the subprime crisis, many foreign banks recruit only if there is a clear case which has resulted in lower churn levels.
A private sector bank has deferred the joining date of fresh MBAs who were recruited while a bank with a broking business has already employed a consultant to recommend a cost-cutting exercise. That’s not all. The sales team at another private sector bank, which sold exotic derivatives to clients, was giving out huge bonuses in 2007.