Bank bonuses seem to be universally shrinking. Asia, often cited as the engine of growth for many firms, isn’t impervious to suddenly skinnier payouts either. Even front-office staff – the revenue-generators who are typically well compensated – will be hard hit by the bonus crackdown. Here’s a forecast of what the pool will be like for front-office employees in Shanghai, Hong Kong and Singapore.
Zhangliang Cao, senior consultant, banking, Antal International, predicts a 50 to 80 per cent drop in payouts from last year. While zero bonuses are possible, Cao says management will consider handing out performance bonuses in a bid to retain staff, especially because there is fierce competition for talent on the mainland. “Top performers will still receive bonuses, but this will be a decrease, to correspond with the average drop in bonuses.”
Cao believes it’s too soon to tell what the post-bonus outlook will be, but says the China market will remain buoyant well into 2012.
Hubert Tam, managing partner, Sirius Partners, sees bonuses falling by about 50 to 60 per cent in Hong Kong. However, he cautions that payments will vary between different front-office roles. Equity derivative positions will be pretty badly hit. Some senior candidates have already been made redundant in Hong Kong, he says. The flow side of businesses, like cash equities and FX, however, is likely to do slightly better.
Tam has seen a handful of strong equity derivatives candidates quit their roles within the last month – even without another position lined up. The resignations were sparked off by news that they would get doughnut bonuses. “I think everyone realises that banks are not doing well, but the willingness to accept a zero bonus is not very high because these candidates make money for the bank. They do expect some kind of reward.” Like Kuek, he reckons post-bonus activity will be minimal and will be mostly triggered by layoffs.
Angela Kuek, head of front-office banking and financial services, Hudson, predicts a “significant decline” in bonus payments. “Last year top performers got 75 to 100 per cent on their base salary and average performers got a bonus of a couple of months. This year average performers will either get zero bonuses or be told to go. Anything from 50 per cent on base salary and above will be considered above average.”
Kuek doesn’t expect a rush of post-bonus activity. “I don’t think there will be much supply of roles in the front-office because deal flow isn’t going to be that strong, at least not in the first six months of 2012.” Whatever little movement there is will be due to redundancies – both teams and individuals. Although most Singapore-based candidates aren’t looking to move right now because of job-security fears, Kuek is seeing increased interest from returning Asians and professionals based in Europe.