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Some Asian bankers are already getting guaranteed bonuses for 2016

Meet the Asian bankers already getting guaranteed bonuses for 2016

Lock in your bonus now.

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.

Image credit: Medioimages/Photodisc

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