There are mega deals in prospect such as BHP Billiton’s bid for Rio Tinto, the Westpac and St George merger plus Xstrata’s play for Indophil, yet it looks like slim pickings for M&A bankers in 2008.

Analyst Colin Whitehead from equities research firm Fat Prophets says the liquidity crisis and the higher cost of funds could restrict M&A activity. “But there’s still life out there and within resources there are a lot of cashed up players who can make moves.”

That might be so, but Victoria Biggs, a consultant at Sydney-based Jon Michel Executive Search, confirms that many banks have shelved growth plans and instigated hiring freezes – although some are bucking the trend.

“There’ve been some selective upgrades in this quarter and banks such as Deutsche, Credit Suisse and JPMorgan are still hiring,” says Biggs. “However, salaries are plateauing and bonuses will be short of 2007 levels for most people.” The Sydney-based recruiter says an associate will command a base of AU$150k and VPs can earn AU$200k+.

Bob Olivier, a director from recruitment specialist Olivier Group, says some local operations are being caught up by the problems of their US and European parents.

“The focus is on internal cost cutting and not external deal generation. Australian staff know their bonus prospects aren’t good and may even have well founded concerns about job security.”

Olivier adds: “Those people would do well to look around for better career prospects elsewhere. There will be strong competition for the limited number of roles. But if you’ve got a solid two to four years in a quality i-bank, associate opportunities are available.”