Meet the bankers in Asia who are still getting guaranteed bonuses
It’s the final quarter of the year and if a bank wants to hire you now it must surely offer you a guaranteed bonus, especially in a comparatively buoyant job market like Singapore or Hong Kong. This may sound logical enough, but the reality is that guaranteed bonuses are increasingly becoming a rarity in Asia – with senior private bankers a notable exception.
Job seekers may be bargaining hard to push up base salaries, but they enjoy less negotiating power over bonuses. As an eFinancialCareers bonus survey reveals, in contrast to 2013, most finance professionals in Asia aren’t expecting large bonuses this year anyway, so employers now have even less need to use guarantees to lure talent.
“I haven’t seen any guarantees this quarter. This is partly because candidates who are considering making a move now aren’t expecting significant bonuses for 2014,” says Bien Law, a senior consultant at recruiters Marks Sattin Banking in Singapore.
Law adds that many of the candidates he’s placed into banking jobs in Singapore recently had been changing careers and therefore had little leverage to demand a guarantee. “For example, I moved someone from a front-office role into operational risk and another from a bank’s back office into a financial services vendor. Their motivation wasn’t linked to money and so they were both happy to forgo their 2014 bonus.”
In extreme cases, candidates – especially those in the middle-office – are even turning down guarantees. In sought-after roles like risk and compliance, base salaries remain more important. Christina Ng, executive director at LMA Recruitment in Singapore, explains: “We’re managing an offer at the moment and the company has arranged for a guaranteed bonus, but the candidate isn’t keen and would rather that they hiked up his base. He is walking away from his bonus in his current firm as he is taking a long-term view of compensation.”
Banks in Asia may have reduced the number of guarantees they dole out, but they haven’t imposed blanket bans. In front-office investment banking they are offering them this quarter if they are “in desperate need, it’s a replacement role and the person could generate immediate revenue,” says Hubert Tam, managing partner at Hong Kong headhunters Sirius Partners.
“Now we’re at the end of October unless a hire is absolutely critical most firms will hang fire until people get paid their bonuses next year. But guarantees for critical hires do happen and it doesn’t matter if the level is junior or senior,” adds Miles Henderson, managing director of Castle Peak Executive Search in Hong Kong.
“Critical hiring” is still sometimes happening in Asia this quarter, in particular when banks haven’t fulfilled their planned headcount for 2014 and risk losing it in the new year. Private banks in Singapore and Hong Kong are particularly prone to this because the relationship managers they are desperate to hire are notoriously difficult to prise away from their current firms.
Senior private bankers are still getting guaranteed bonuses to help compensate them for the loss of client revenues that moving banks inevitably involves, says Rahul Sen, a director at search firm Sheffield Haworth in Singapore. “If your total comp is based on you managing X million of client assets, it will take you more than a year to build this back up at the new bank."
“I’m currently moving a guy – a top-10 coverage banker in his market – into a European private bank in Singapore and he’s getting a sign-on for 2014 and a guarantee for 2015 as long as he meets minimum AUM targets, but these aren’t very onerous. At his level, it wouldn’t be worth moving without all this – he’d be better off staying put,” says Sen.
Beyond the senior ranks of relationship managers, guarantees are uncommon in private banking, he adds.