This time last year banks in Singapore and Hong Kong were giving out guaranteed bonuses when they wanted to recruit urgently at VP level and above. Now the practice of compensating bankers hired in the fourth quarter for the loss of their current bonus is confined to a handful of MDs, say headhunters.
International banks in Asia have been restrained in their use of costly guaranteed bonuses ever since the global financial crisis in 2008. But against a backdrop of market turmoil in China and savage cost cutting at firms from Deutsche to Standard Chartered, headhunters say banks are clamping down harder than ever on guarantees this quarter.
“Pretty much all the US and European banks are less flexible on guarantees now than they were even 12 months ago,” bemoans one Hong Kong headhunter, speaking on condition of anonymity. “At director level and below if you continually push for one it even could affect your chances of getting the role.”
“This year most of our banking clients don’t even like the term ‘guaranteed bonus’ to be mentioned during negotiations,” says Eunice Ng, director of search firm Avanza Consulting in Hong Kong. “You might get a ‘target bonus’ instead, a payout next year only if revenue targets are met.”
“If a banker comes in with a guarantee that immediately impacts the whole bonus pool for the team and pools are under pressure at the moment,” adds Nick Wells, a director at search firm Webber Chase in Singapore. “This fourth quarter we hardly see any guarantees from financial institutions in Asia.”
Guarantees are no more common in Asian private banking than they are in investment banking, even as the wealth management sectors suffers from chronic regional skill shortages and banks like Credit Suisse up their hiring of relationship managers.
“There are fewer guarantees in private banking than last year,” says Ciara Heneghan, a senior wealth management recruiter at Carlton Senior Appointments in Singapore. “Even with the larger banks, being able to secure such signs-ons or guarantees is increasingly hard due to rising cost/profit margins in the sector.”
So is anyone getting guaranteed bonuses in Hong Kong and Singapore right now? Headhunters say that the lucky few are almost always MDs, in contrast to 2013 and 2014 when some VPs and directors received them. “And typically speaking the role must also have been open for a longer time frame and/or be within a niche senior candidate pool,” says Heneghan.
Farida Charania, Asia Pacific CEO of search firm Nastrac Group, says she recently secured a guarantee for an overseas-based Singaporean lured home to fill an urgent fourth quarter vacancy. “The banks here want to hire more locals into management roles so this was really a case of being in the right place at the right time for the candidate, even though generally guarantees are becoming less popular at the large banks.”