By selling its Singapore and Hong Kong wealth management business to Bank of Singapore (BoS) instead of a rival bidder, Barclays may have staved off a big exodus of private bankers to the likes of UBS and Credit Suisse.
Bank of Singapore, whose parent company OCBC last week agreed to buy the Barclays unit for $320m, is now tipped to want to retain most of Barclays’ 130 Asian relationship managers (RMs), say private banking industry sources.
Meanwhile, although some RMs will look for work elsewhere, the majority will opt to join the merged firm, provided their compensation deals are up to scratch.
Fellow Singaporean firms DBS and UOB were also reportedly in the running to clinch a deal with Barclays, as were Julius Baer and Nomura.
“Overall Barclays RMs will be pleased that BoS won out – more people may have left if a different firm had won,” says a headhunter who asked not to be named. “For example, unlike DBS’s private bank, BoS is a different brand to its parent company OCBC. It has an independent, elite image – RMs like that.”
But OCBC’s ownership is still a factor that should help BoS retain Barclays' bankers, says Liu San Li, an ex-private banker, now head of private wealth management at I Search Worldwide in Singapore.
“OCBC being consistently rated one of the safest banks in the world is a big plus, considering the negativity surrounding Barclays over the last few years,” he says. “This is especially effective in retaining clients who are getting increasingly uncomfortable with Barclays.”
“The Barclays crew should adjust well to BoS,” adds former Merrill Lynch private banker Rahul Sen, now head of wealth management at search firm The Omerta Group in Singapore. “This is partly because it’s an Asian owned private bank, but mixed with a traditional European feel – some of its RMs originally came from ING when OCBC bought ING’s Asia private bank back in 2009.”
OCBC’s “strengths in real estate lending and corporate banking” will provide an added incentive for Barclays’ RMs – and their clients – to stay put, adds Sen.
The bankers will, however, want to ensure that their compensation remains at least on par with what Barclays is currently paying them.
“A good monetary agreement will help to retain Barclays’ people,” says the anonymous headhunter. “For example, if you were on a $300k base salary and a $150k bonus last year, BoS might offer you the same. But the bonus might be tied to you converting clients to BoS, which would help keep current RMs happy.”
Sen says any potential “monetary retention deal” offered to the Barclays incomers wouldn’t be “ridiculously high” in order not to generate discontent among existing BoS bankers. “BoS will welcome the Barclays troops and is sure to reach a sensible arrangement to please both sides.”
He adds: “BoS will certainly want to avoid what happened when Julius Baer bought Merrill Lynch's international wealth business in 2012. There were four different pay-out structures for the first 12 to 18 months post-merger and the top performers at JB were annoyed at the deal given to retain the equivalent Merrill bankers.”
Whatever the compensation deal, a minority of RMs from Barclays will choose to leave or won’t be wanted. “I’ve had calls from Barclays’ bankers already,” says the anonymous headhunter. “I’d expect this to be a smooth takeover without much fallout, but it won’t be for everyone – for example both banks have strong India and Indonesia offshore desks, so there’s some potential for overlap.”
Liu from at I Search adds: “RMs from Barclays who have been covering mixed markets without a single predominant one might be more in the spotlight because BoS has distinctive market segmentation. Normally, in this situation they’d be allowed to operate in the status quo and be given a timeframe before deciding on a specific market to cover. That said, senior RMs with huge books will have bargaining power even with mixed markets.”
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