financial markets around the world, usually upbeat private bankers
in Singapore have suddenly become cautious in their hiring outlook
for 2008. Now, it looks as if all those expensive advisers really
are going to have to justify their sky-high salaries this coming
year.
Although 2006 and 2007 saw a seemingly inexhaustible demand for
relationship managers commanding six-figure pay packages, 2008
looks to be a year of consolidation and quality control in the
recruitment process, leading bankers indicate.
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Barend Janssens, head of ABN AMRO Private Bank, Asia, says that
generally 2007 was a very good year for private banking. He said:
“Therefore, people are expecting good bonuses – payable in February
and March 2008. Markets are cautious, as the subprime issue is not
over. The market’s view is that there will be more writedowns – the
impact of which will become clearer when the banks release their
2007 results in February or March. This will clearly have a ripple
effect on markets, clients and then on hiring.”
If the first quarter is positive, he believes it will be “business
as usual, which points to a generally good year to be a private
banker. If there is more caution, then junior- to mid-level private
bankers will find the going tougher. Seasoned bankers have ridden
this through so they will have the tenacity and experience to ride
through another bumpy year.”
Slowing revenue
At Julius Baer, Wilfried Kofmehl, head of South-East Asian
operations, cautioned that private banking revenue growth in Asia
may slow this year due to volatile markets. Nonetheless, Baer,
which has just hired six bankers from UBS, is staying with its
expansion plans in the region, which includes adding another 100
staff by 2010/11. Its UBS hires include Michael de Santiesteban,
who becomes Baer team head and managing director, marketing, for
South-East Asia.
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By GlobalDataFor many banks, Asia-Pacific is still seen as a key area for growth
of wealth management, particularly at a time when the US economy
looks as if it will slide into recession and Europe could slow as
well.
Mark Morgan, head of human resources for Citi Global Wealth
Management, International, said: “We expect to continue growing our
Asia-Pacific business in strong double-digit percentage terms in
the short to medium term and we will therefore continue to recruit
the appropriate talent in order to match our business expansion and
growth needs.”
Headhunting firms are also confident of a bumper crop of
recruitment targets, especially after the bonus season. Roger
Wilson, managing director for Boyden Global Executive Search, said:
“We’re still in a hot market – everyone is buying anyone that has
private banking capability. People express preferences but no one
is going to turn down a good quality younger banker. There is still
a huge talent shortfall so you can’t be too fussy and want only ten
years of experience if someone has only eight years.”
Wilson declared: “Markets that are lopsided on either the supply or
demand side are very attractive for executive search. But if either
the buyer or seller has too much power, deals are difficult to do.
At the moment, the seller is king. Sellers are spoilt for choice
and have multiple alternatives that they can keep as an asset
bank.”
Roman Scott, managing director of Calamander Capital, a
consultancy, contended that the private bankers “are still talking
bullish because everyone wants to keep up the momentum. They do not
want to sound the alarm bells that there will be a slowdown and so
have to maintain an air of bullishness.”
He continued: “We remain concerned but not worried. If you are
worried you would be firing people, but if you are concerned you
are probably not hiring. For those banks that are exposed to China
and India, they can be more ‘gung-ho’ and say that they are still
growing, but the classic private banks are cautious.”
No more blank cheques
Although this year’s bonus levels are likely to reflect the boom
that marked 2007, there has been talk in the market that next
year’s remuneration will not see the double-digit growth that
relationship managers have enjoyed for the past two to three
years.
Scott points out that the cost base of the private banking industry
is heavily weighted towards the expense of people. He said:
“Somebody has to deflate the relationship manager price bubble. It
was getting out of control with everyone paying more and more.
After the bonuses are done, there will be a cool down – enough is
enough. Wages cannot grow 20 percent year-on-year. I would not be
surprised if at the end of 2008, people will be taking home about
the same about as they did in 2007.”
But Wilson insisted: “There are plenty of buyers (for talent) out
there and I don’t really expect them to ‘haircut’ too much on
offers. There must be some subprime collateral impact but if you
offer 20 percent less than what they are expecting you may be
disappointed. Many bankers are likely to be in touch with
headhunters already and/or have headhunters swarming around
them!”
Rahul Malhotra, Merrill Lynch’s head of global wealth management,
Asia-Pacific, agreed: “As in the past, you are going to have to pay
for the big performers and the level of quality they bring to the
table. And this will continue to be the case this year as
well.”
Talking to PBI, he said he is bullish on the hiring outlook though
his optimism comes with the qualifier that is often heard across
the industry. “Merrill Lynch Global Wealth Management will focus on
its continued ramping up of hiring, given our robust outlook. While
we cannot speak for other banks, we predict hiring will continue
across the region, perhaps not as aggressively as before,” he said.
“What we have seen previously, over the past two to three years,
has been more of mass-scale hiring within the industry. Going
forward, we are looking generally at banks hiring on a more
selective basis.”
ABN AMRO’s Janssens maintained: “The days of hiring big teams are
minimal. Most banks have done this over the past year. The pressure
is on for teams to start producing.”
The banker said he is hearing from the market that some banks are
“beginning to realise that they over-hired”. He said: “Smaller
private banks will feel the pinch more because of the lag effect as
they hired on the curve close to the apex. With the market less
rosy now, they are feeling the pressure and are reacting with more
caution.”
Calamander’s Scott believes that, in fact, the smaller, boutique
private banks stand to gain from the current market tumult but are
not marketing enough. He said: “If you’re a smaller bank, you would
have previously faced an uphill battle in market awareness as these
global giants are everywhere. But they should now be going out and
saying that ‘we only do private banking and will never be caught
with our trousers down with [collateralised debt
obligations]’.”
