Private banks in Asia are contacting headhunters in a bid to hire the 30 relationship managers (RMs) that J.P. Morgan has axed in the region.
The US bank made the cull – which reduces its RM headcount in Asia by about 20% – as part of a move to focus on wealthier clients with investable assets of $10m or more, up from a previous threshold of $5m.
“UBS and Credit Suisse especially have already shown a huge interest in the RMs over the past few days, as has Standard Chartered,” says a headhunter in Singapore who asked not to be named.
Both Swiss firms need more RMs to help them pivot their businesses towards Asian wealth management – Credit Suisse alone wants to hire about 185 private bankers by the end of 2018 to meet its headcount targets.
Meanwhile Stan Chart is “hiring cautiously”, says the headhunter. “Most of it is to replenish RMs who’ve left, been laid off, or are on their way out soon.”
Julius Baer and boutique banks which have “very aggressive” hiring plans – including LGT and EFG – are other likely destinations for former J.P. Morgan private bankers.
“I’ve now been contacted by a large bank specifically to hunt for J.P. Morgan RMs,” says another anonymous recruiter. “I believe most if not all of them can be placed because it wasn’t that they weren’t performing, it was an overall change in business decision.”
“They are very marketable because JPM is a top-tier bank, hence the perceived quality of these RMs is high within the industry,” adds Liu San Li, an ex-Coutts private banker, now head of private wealth management at I Search Worldwide in Singapore. “Many other tier-one private banks will vie to grab them.”
And while J.P. Morgan is cutting RMs with clients in the $5m to $10m asset range, other private banks are still hiring in this ‘high-net-worth’ segment, says Liu. The minimum asset base at many private banks in Asia is as low as $2m to $3m. “Moreover, the JPM RMs’ assets are investable – not pure deposits – making them even more attractive to other banks,” says Liu.
Private bankers under pressure
But while several private banks are looking to hire them, the J.P. Morgan bankers will be under immediate revenue pressure when they join a new firm because a potentially high proportion of their clients may not move with them.
“They have great sales and investment skills and it will be easy for them to find another role, but they will then face the challenge of building up their book from a low threshold in a market which has become more competitive and is fraught with uncertain economic conditions,” says Pathik Gupta, head of Asia Pacific wealth management at consultancy McLagan.
J.P. Morgan may actually choose to continue serving some of its more valuable sub-$10m clients, especially ones with potential to invest more in the near future, says the first anonymous headhunter. And the 30 redundant RMs do have some clients who already breach the $10m mark – J.P. Morgan will want to keep them on board.
“JPM is widely known to operate a uniquely strong institutional relationship with its clients,” adds Gupta. “It achieves this by ensuring that clients have multiple touch points within the bank beyond the RMs. So while JPM has decided to focus its attention on ultra-high-net-worth clients, it will still be very hard for the sub-$10m people to move clients and assets to other private banks.”
Liu from I Search agrees: “Trying to unwind clients’ investable assets from in-house JPM products could be a tedious, complicated process. And the relationships are locked in by teams of investment specialists courtesy of JPM’s model whereby RMs share client relationships with these specialists. RMs must also be mindful of any non-solicitation period, during which the specialists could shut the door even more tightly.”
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