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Julius Baer-Macquarie marriage means more private banking hiring

Last week, Julius Baer announced it will take over Macquarie's US$1bn private wealth business in Asia. In exchange, the Swiss bank will refer its clients to Macquarie for their investment banking needs. Julius Baer will take on seven relationship managers from the Australian firm as a result of this new alliance, according to the Financial Times.

Headhunters believe the union will herald more private banking hiring at Julius Baer. Barry Lawrence, principal consultant, MG Group says the bank has grown "significantly" - from below 50 to more than 350-strong in Singapore - in the last five years. "The business has historically succeeded in attracting high calibre private banking professionals, given its good reputation, and therefore should not have to pay much above market rates to attract talent."

Remuneration, retention and egos

The Swiss bank will, however, have to make it financially feasible to retain its newly-acquired wealth managers. A Hong Kong private banking recruiter, who declined to be named, says: "Usually the firm will offer these bankers some sort of incentive to stay on, as in the instance of the Bank of Singapore takeover of ING's wealth management business, or the Standard Chartered takeover of Amex private bank."

Lawrence adds: "To gain the commitment of a group of private bankers to join the business, the bank will have to demonstrate it has a good business model, first-class career opportunities and a competitive remuneration structure."

It will also have to consider its current business structure, future plans and the commercial viability of such hires, including the profiles of potential new clients, the possible duplication of accounts, and how new employees can be successfully integrated into the business with minimal disruption.

"As with any hires, there has to be an ongoing mutual "buy in". And while individuals can choose to leave, moving a percentage of their clients with them, private banks will also be closely monitoring individual performance, thus minimising the potential for disruptions to their business."

Will this mean fewer private banks in Asia?

The Julius Baer-Macquarie collaboration could signal increased consolidation among Asia's private banks, given the greater pressure on margins that many firms are facing.

Our anonymous source adds: "I think there may be some selected consolidation in the future, though I wouldn't expect it to be en masse. The Julius Baer-Macquarie firm is a rather unique situation as the Swiss bank doesn't have an investment banking arm - a service which adds a lot of value to its ultra-high-net-worth clients, thus this arrangement will very much compliment its offering."

Looking ahead

Despite tumultuous market conditions, wealth management in Asia is still looking relatively strong, especially when compared with investment banking. For instance, a recent Private Banker International survey reported that assets managed by the top-20 private banks in Asia Pacific have risen by 76 per cent since 2007 to US$1trn.

Lawrence says Singapore remains the main hub for private banking in Asia and banks are still looking to expand. He's also seen increased demand from high-net-worth individuals who wish to book assets ex-Singapore and private bankers who are keen to relocate to Singapore given a suitable career opportunity.

"While most private banks may not be aggressively hiring now - given the shortage of available talent that is unlikely to be addressed in the near future - they are still keen to look at the resumes of high-calibre candidates, with good books of assets and proven track records, on both an opportunistic basis and when taking into account likely hiring requirements for early next year."

AUTHORShree Ann Mathavan Insider Comment

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