Job offers containing bloated pay rises are becoming increasingly common in Asian wealth management, but private bankers should think twice before accepting them, says a senior Citi banker.
“Right now, with many smaller private banks trying to hire in Asia, there are some enormous salaries and inflated titles being offered to some private bankers,” says Jyrki Rauhio, South Asia head of Citi Private Bank, without commenting on any specific firms. “Inflated salaries aren’t sustainable and come with inflated expectations. Bankers may suffer over the long-term if they struggle to perform.”
Not all relationship managers are swayed by money, though. “One of our long-serving bankers recently got an attractive compensation offer from another bank,” says Rauhio. “But when we gave him a counter offer, we didn’t just talk about the money; we talked about his long-term career prospects and the risk of moving. He decided to stay.”
Rauhio says before joining a new private bank, RMs should “do their homework and consider whether there’s a risk that the firm may not be in Asian private banking in five years’ time”. “If you’re hesitant, don’t join,” he adds.
Recent history shows that RMs may well have reason to be hesitant. Tightening profit margins have forced several players to leave the Asian wealth sector. In 2016, Barclays sold its Asian wealth unit to Bank of Singapore, while UBP took over Coutts’ business in the region. LGT completed its buy-out of ABN AMRO’s private bank in Asia last year, and DBS finished its acquisition of ANZ’s Asian retail and wealth operations this February.
“Even if the bank will be around long term, ask yourself whether it has a platform to suit your clients’ needs. If not, don’t go for them, even if you might make more money in the short term,” says Rauhio. “We’ve recently had some senior bankers approach us who are interested in joining Citi because they’re not sure that the bank they’ve moved to has the right platform for them and their clients,” he adds, without naming any competitors.
Job-seeking RMs should also ask themselves “about the bank’s strategy in Asia”, says Rauhio. “For example, does it have a strong brand and franchise in the market that you cover? And what’s the bank’s cost-income ratio?”
Rauhio says he will be expanding his team of South Asia bankers – which is primarily based in Singapore and covers markets such as Malaysia, Thailand, Indonesia, and the Philippines – over the next 12 months. Citi currently has more than 200 private bankers across Asia, split 60/40 between Hong Kong and Singapore.
“Over the last few years our front-office headcount in this region has been very stable, while many of our competitors have been aggressively increasing theirs. That’s partly because we have a very low turnover rate, which reduced the need for us to expand. Now we want to be slightly more aggressive ourselves, with a primary focus on the quality of talent,” says Rauhio, without stating hiring numbers.
There are underlying drivers behind the recruitment. “As wealth has increased in South Asia, it’s also become more organised – there are more family offices being set up,” says Rauhio. “Clients are also looking to be more diversified. For example, they no longer want all their wealth tied up in Hong Kong real estate – that’s too risky.”
Citi’s recruitment plans for South Asia bankers come at a time of continued talent shortages in wealth management, but Rauhio says his firm is comparatively well placed in the job market. “There’s been plenty of talent movement and industry consolidation in Asian private banking. Because of this, many bankers are now looking to Citi as a place where they can better serve their clients due to the extensive platform.”
The pull of private banking
Still, Rauhio says Citi isn’t just relying on hiring from competitors and is looking to “groom people internally”, given sector-wide “weak growth in overall banker numbers across Asia”.
Private banking is becoming a more popular career choice among local graduates and Rauhio says his team is receiving “more and better quality” applications at that level. Citi offers a two-year analyst programme specifically for its private bank, which rotates graduates across different business areas. “Students in Asia are doing the maths and can see that a lot of the growth in financial services here is in wealth management,” he adds.
Citi is also encouraging internal transfers into the private bank from global markets, investment banking and commercial banking. “There’s a huge interest from other parts of the bank. I was talking the other day to an equities specialist who wanted to become a private banker,” says Rauhio.
Rauhio is a transferee himself, having moved into the private bank in 2010 following a 16-year career in corporate banking at Citi in London, Singapore, Poland, New York and his native Finland. “I’d just gone through the financial crisis and wanted to do something different. I jumped at the chance to join the private bank, which was becoming a growth area for the firm,” he says. “In investment banking, most of my dealings were with CFOs and treasurers. But in private banking, I particularly enjoy getting to speak directly with entrepreneurs on a daily basis.”
Success as a private banker these days is no longer about selling products and being a broker, he adds. “Instead, you have to take a step back and connect the dots for your clients – understand their risks and exposures. At Citi, you must also understand all the bank’s services – from investment banking to credit cards and custody – as many of your clients will be business owners.”
You will also need to embrace technology because many day-to-day transactions for clients are now best handled online, he says. “But private banking is still very high touch,” adds Rauhio. “For example, our clients in Asia are increasingly talking about alternative investments such as private equity and hedge funds. You can’t just throw these types of complex investments into a client’s portfolio and model them online. Clients want to ask their bankers RMs detailed questions before they make an investment decision – they want human interaction.”