While investment banks in Asia have been hiring and firing en mass since the financial crisis, private banks have been slowly but steadily adding headcount. Until now.
New figures from Asian Private Banker show that the combined headcount of relationship managers (RMs) at the 20 private banks with the largest Asian RM workforces fell by 62 in 2015 compared with the previous year.
As a mere 1.2% drop, this may not seem statistically significant – except that RM numbers rose by 7.4% and 6.8% in 2014 and 2013 respectively. During both these years the industry’s main players added a combined 300 new private bankers to their ranks. That trend seems to have reversed.
So how, exactly, did the number of RMs fall, despite the growth of Asian private wealth continuing to exceed that of Europe and the US?
“The industry did take a bit of a breather from hiring in 2015,” says former Merrill Lynch private banker Rahul Sen, now head of wealth management at search firm The Omerta Group in Singapore. “While some firms restructured themselves by making management changes, others decided to exit Asia, so their recruitment stagnated.”
RBS, for example, offloaded its Coutts International private banking arm to Union Bancaire Privee in March 2015. And Barclays decided to sell its Asian wealth unit last year as part of an overall shift to focus on its core UK operations. Yesterday Bank of Singapore emerged as the winning bidder in a deal worth $320m.
Meanwhile, some of the sector’s previously most expansionist banks cooled down their hiring and consolidated their businesses in Asia. As we noted yesterday, UBS’s Asian RM headcount actually fell 7.9% in 2015. Julius Baer recruited a mere 10 bankers in 2015, according to Asian Private Banker. This was in contrast to the 160 it added between 2012 and 2014.
“Julius Baer hired aggressively from 2012 to 2014, including the purchase of the Merrill Lynch business,” says Sen. “Plus it had a change in leadership too, with Jimmy Lee joining as the head of APAC in 2015. Of course he restructured the business, while the bank absorbed the strong hiring it did over the previous two years.”
Exodus from Asian private banking jobs
There's also the fact that people are leaving Asian private banking jobs voluntarily. Tightening profit margins haven’t just led to private banks pulling out of Asia, they've also piled the pressure on individual bankers.
“There is now significant pressure on RMs to perform and banks are getting more serious about bottom-performer management and driving higher productivity,” says Pathik Gupta, head of Asia Pacific Wealth Management at consultancy McLagan. “This has recently led to more bankers escaping the industry to a less stressful career.”
Gupta says there’s a “growing trend” of RMs moving to external asset managers (EAMs), particularly family offices, or becoming independent financial advisors. Last year total assets under management in Asia grew by 20% for EAMs, but fell by 4% for the top-20 private banks.
The rising compliance burden is also to blame for RMs leaving private banks, says Josie Ling, a private banking consultant at search firm Eban in Singapore. “New regulations make it harder to do business and open accounts and some RMs are being let go or choosing to go because of these difficulties.”
For private banks that do want to expand in Asia (and there are many, including Credit Suisse, UBS, DBS and Bank of Singapore) this is not welcome news. Hiring experienced RMs who can bring a share of their clients with them is notoriously hard to do in the Asian market.
“The talent shortage will continue,” says Gupta. “We think the industry will see annual RM headcount growth of only 2% to 3% over the next five years, with even occasional dips as we saw last year.”
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