Investment banks in Singapore typically won’t pay their bonuses until after Chinese New Year, but a general picture of the state of 2016 bonuses is starting to emerge. Here’s what you need to know.
1. Bonus pools will fall overall
This year, at $688m, Southeast Asia investment banking revenues hit an 11-year low for the first nine months, according to Dealogic. Angela Kuek, director of Meyer Consulting Group in Singapore, expects this to lead to a shrinkage of between 10% and 20% in overall bonus pools at global banks in Singapore. “Last year bonuses for average front-office performers were still equivalent to about three to four-months of base pay,” adds Farida Charania, Asia Pacific CEO of search firm Nastrac Group. “But from what I understand from banks, this year it will be more like just one to two months.”
2. Especially at these banks
Firms that have been aggressively culling jobs and costs in Singapore – in particular Barclays, Deutsche Bank and Standard Chartered – will be the least generous with their bonuses. “This year has been a particularly difficult one for ASEAN-focused front-office investment bankers. Given the amount of restructuring that has been happening, I expect a pretty subdued bonus climate,” says Jay Abeyasinghe, associate director of financial services at recruiters Morgan McKinley in Singapore.
3. Expect more donuts
Come the first quarter banks will be handing out more ‘zero’ bonuses to the expanding group of underperformers within their ranks. “Bonuses at international investment banks in Singapore will likely be even more polarised, with a few top performers taking home the lion’s share of the pot and the poor performers receiving a zero or quite close to it,” says Abeyasinghe.
4. DCM could fare better
Bucking overall downward trends in regional investment banking, Southeast Asia DCM volume reached $90.1bn in the first nine months of 2016, the third highest total for the period on record. “From what I hear, bonuses could be slightly up due to DCM activity being better than 2015,” says Richard Aldridge, a director at recruiters Black Swan Group in Singapore. As we pointed to earlier this month, however, Asia-focused banks are now dominating the league tables. CIMB, DBS, HSBC and Maybank took the top-four slots for DCM revenue in Southeast Asia in the year to end-September.
5. Juniors ringfenced
Expensive senior bankers have borne the brunt of redundancies in Asian banking over the past 12 months (in late November, for example, Standard Chartered axed about 15 corporate finance MDs). Now this ‘juniorisation’ trend could be spreading to compensation. In 2015 Barclays ringfenced a percentage of its bonus pool for junior staff and more banks may follow suit this year, says Nick Wells, a director at search firm Webber Chase in Singapore. “Locking in the next generation means the buy-side can’t afford to hire associates because they’re getting a guaranteed cut of the bonus pool.”
6. Back-office bonuses will be bad
Banks from Barclays to Credit Suisse have continued to move operations jobs out of Singapore (mainly to India) this year. They are in no mood to up costs for the staff that remain in the city state. “It’s fair to say that within back-office functions the bonus outlook is mediocre,” says Abeyasinghe. “With the downsizing and off-shoring of some major players in Singapore in 2016, employees’ expectations have been managed downwards. The outlook for 2017 remains the same.”
7. In the middle-office, go for a local bank
For 2015, DBS, OCBC and UOB paid their top-performing governance staff bonuses of up to four months’ salary – higher than the typical one-month payment on offer at international banks in Singapore. “I expect the local banks to continue their steady approach to bonus payments – they often tend to be more egalitarian in tough markets,” says Abeyasinghe.
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