Recent pay hikes at global i-banks aren’t limited to US or European headquarters – their Australian franchises are also getting more generous in a bid to retain top talent.

Credit-crunched companies like UBS, Citigroup and Bank of America-Merrill Lynch have all recently upped Australian salaries as they battle to stop defections to less tarnished rivals.

“Merrill will pay whatever it takes to stop someone leaving and it has the latitude to push up base salaries,” says one headhunter who asked not to be named.

Morgan Stanley is the “most aggressive” base booster, he adds. Salaries there have doubled for high-performing MDs and risen 80 per cent for VPs. Associate pay has jumped by a quarter, while analysts are taking home about 10 per cent more.

“But Morgan Stanley can’t actually hire many people until next year, so it’s more about retaining than attracting talent. Perhaps the policy is working - not many people have left,” adds the recruiter.

Salaries aren’t surging at global banks with more solid brands – such as Goldman Sachs JBWere, JP Morgan, Deutsche Bank and Credit Suisse – because these firms aren’t so scared about losing staff.

“You used to be able to say with certainty ‘this is what a VP gets in Australia’ – the pay range was very small. Now there’s a great disparity between the global banks,” comments Victoria Biggs, a partner at Platinum Pacific Partners.

It’s too early to say for sure how these salary strategies will affect retention and recruitment. Merrill Lynch has reportedly poached 10 property investment bankers from UBS, a sign that pay spikes at both banks might have cancelled each other out.

And the more senior the banker, the less important the base. “MDs who usually get a four-times bonus won’t decide to stay in a job just because their basic goes up. If their bonus is set to fall because the franchise is suffering, they might look to join a more secure bank where bonuses are potentially higher,” says Biggs.