“They may have to pay more, and they may really have to sell the stability of the pay as a positive feature,” Trevino said.
The regulators acknowledged the difficulties their rule might raise for subsidiaries -- which would include asset-management units -- and how it might hurt their ability “to compete for managerial talent with stand-alone companies of the same size.” The proposal suggested the firms might have to pay people more to make up for the stricter requirements, or even spin off the subsidiaries.
Intense Competition
Big banks have long competed with independent money managers for top talent, but the rivalry has grown more intense in the wake of a crisis and recovery that has left banks with tattered reputations and fewer opportunities for growth.
Asset managers have become especially valuable for banks in recent years, bolstering profit margins with their steady fee-based income as firms face pressures on lending and trading revenue.
If the major provisions of the rule survive through months of public comment and revisions, the fund managers bringing in those fees will have to decide whether it makes sense to keep working at banks.