If you’re an investment banker in Hong Kong or Singapore, the current 2015 bonus round is probably proving unpleasant (unless you’re a star rainmaker or work for J.P. Morgan or Goldman Sachs). Across the market bonuses are down at least 10% compared with the previous year, say headhunters.
Things are looking better in Asian private banking. We understand that bonuses in the sector – which are more closely linked to individual revenue performance and are not so affected by global cost-cutting drives – are roughly flat year-on-year.
Moreover, if you decide to move jobs after pocketing your 2015 payment in the next few weeks, your new firm may well give you a guaranteed targeted bonus for 2016. Receiving a guarantee so early in the year is virtually unheard of in investment banking – and it’s becoming a rarity even in the final quarter. In private banking, however, things are different.
Private banks in Singapore and Hong Kong are now offering guarantees on a “case by case” basis, mainly to senior relationships mangers (RMs) at executive director (ED) and managing director (MD) level, says Liu San Li, an ex-Coutts private banker, and now head of private wealth management at I Search Worldwide in Singapore.
“If you’re an experienced private banker you can negotiate a guarantee – the market is still short of candidates, so banks need to be flexible to get good people on board,” agrees former Merrill Lynch private banker Rahul Sen, now a headhunter at The Omerta Group in Singapore. “The new bank will say, ‘we will give you X bonus for 2016 on condition of you obtaining X in revenue or assets under management’.”
He adds: “If you’re an ED or MD on a S$400k fixed salary and you got a S$400k bonus for 2015 and another banks offers you a S$500k base to move in March or April, why would you do it? You risk your total compensation actually dropping by up to $300k.”
Sen says that RMs who don’t receive guaranteed bonus offers won’t always move: “The vast majority of senior private bankers, even those frustrated at their current roles, won’t change jobs if their income might fall.”
Today’s guarantees are not the open-ended ones that preceded the financial crisis. These days, a bonus is guaranteed if you hit your targets. However, the target that triggers a bonus guarantee will often be lower than a private banker’s AUM or revenue numbers at a former firm. “If you were managing a $300m book before, the new bank might tell you to reach $100m in year one as you build back your AUM,” explains Sen.
It’s not only the likes of UBS and Credit Suisse – both trying to hire hundreds of new RMs in Asia – who might give you a guarantee. Boutique private banks in Asia, the likes of Pictet and LGT, are also using guarantees to overcome talent-attraction disadvantages such as the small size of their product platforms.
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