After stalling momentarily on the hiring front last year, private banks in Asia are ready to ramp up activities to meet headcount targets, with many zeroing in on high performers with megabooks.

The momentum already showed signs of picking up in 4Q20, and recruiters concurred that private banks were building up the pipeline, even during the worst days of the pandemic.

“The number of open roles in private banks has been significantly lower. The larger banks are now only interested in bankers with a minimum book of US$400 million,” Sid Sibal, regional director at Hudson, told Asian Private Banker.

He conceded that bankers with a book size lower than US$400 million will have a difficult time receiving offers. On the other hand, the headcount for middle and back-office roles stayed flat on a YoY basis.

Sujan Melwani, managing director, DMO Group, observed that active hiring will be expected for private banks that did well in 2020, which is indicative of a more vibrant hiring market in 2021, since the industry as a whole came out of last year’s crisis with flying colours.

Melwani highlighted that large European and US banks in 2020 “were more focused on spending in their home markets”, adding that “this year, spending and hiring in overseas markets will pick up for these players”.

Managing revenue expectations
Greater China and Southeast Asia (especially Thailand, the Philippines, and Vietnam) remain the markets which saw acute demand for talents. The latest moves in SEA include HSBC rolling out an onshore private banking branch for Thailand and Nomura bulking up its international wealth management team with a slew of Southeast Asia-focused heavyweight hires.

“In Southeast Asia markets, the worst scenario was the hiring freeze across the industry which we saw last year — instead of banks letting people go,” said Pierre Pineau, director Southeast Asia & head of Thailand, Funds Partnership Asia. “But things quickly picked up in 3Q20”.

For a large part of 2020, the SEA markets — where a large number of bankers are based out of Singapore and Hong Kong — suffered from a freeze as a consequence of travel restrictions, which blunted client acquisition and engagement.

Pineau noted that in response to that, private banks had been reasonable in terms of managing expectations for revenue and net new money. “However, targets for 2021 might be ‘re-adjusted’ accordingly,” he added.

Bonus outlook likely to disappoint
With the exceptions of a few out-performers, 2021’s bonus payouts are bound to fall short of what bankers anticipated.

Even for private banks that reaped record revenue in 2020, an air of wariness is prevailing about the uncertain outlook lying ahead for 2021, but Melwani believed that bankers at such banks may see regular bonus payouts.

“[But] for bank whose business performance was flat [in 2020], you will see bonuses coming in a little lower than the past year, and for those that have fared badly, I can see them not paying bonuses,” he said.

Sibal shared that the bonus payouts across the board are average compared to the past years — about two, three months of salary overall speaking. However, it will be a different story for outperformers, whom the banks will try their best retain and reward.

Robert Walters has told Asian Private Banker that discretionary bonus payouts this year will be lower than 2018 levels: on a discretionary basis, it will be 6-12% for Asia-based houses and 8-15% for European houses. While for US houses the total payout ratio is between 6 to 12%.

Sibal said private banking salaries in 2021 will see an uptick smaller than past years: “On a year-on-year basis, salaries in private banking have seen a 2 to 4% increase, so generally speaking, it is comparatively lower than past years, which generally are between 5 to 8% increase.”

IAMs reverting comp structure
In the past few years, the region’s independent asset managers (IAMs) have been paying base salaries at the level of private banks to attract talent. But a growing number of them are reverting this decision, especially after witnessing the market rout in March 2020.

“In the last 12 months, I have seen major IAMs no longer paying base salaries, and increasing commission,” explained Sibal. “This move was not welcomed across the board, and we started to see a sudden surge of IAM bankers looking to get back into private banks.”

Melwani highlighted the exponential growth the industry has experienced over the past few years. Foreign IAMs, as well as family offices based in Europe and the US, are coming to Asia, he said “looking for growth through acquisition and hiring ex-private bankers”.

In addition, wealth management investors from the US and Europe will pour their gold into the IAM segment to help with its growth and establish a “support system”, Melwani pointed out.

He believed that with a few Asia-based players already hitting the one-billion AUM mark, 2021 is bound to see more movement in IAM.