Asian private bankers’ compensation will level off as firms begin to recognize that the costs don’t “make economic sense,” according to Citigroup Inc., the second-largest private bank by assets in the region.
“In the last five years, there’s been a tendency for new entrants to pay over the top” to hire bankers, Akbar Shah, head of Southeast Asia and Australia for New York-based Citigroup’s private banking unit, said in an interview in Singapore. “That will stabilize. In Asia, it will flatten and I don’t see it going the way it has.”
Competition to hire bankers has escalated along with the demand for private banking services in a region which last year surpassed North America as home to the most millionaires. That pushed costs as a percentage of income in Asia, excluding Japan, to as much as 80 percent last year, compared with 65 percent for European firms, Boston Consulting Group said in June.
Directors and managing directors in Singapore last year were paid salaries of as much as S$400,000 ($316,000) on average, excluding bonuses, with sign-on bonuses being “multiples” of that, Shah said. Vice presidents and assistant vice presidents made about S$130,000 while junior bankers were paid S$100,000, he said, commenting on data provided by London-based recruitment firm EMA Partners International.
Senior bankers in Singapore earn S$200,000 to S$500,000, EMA estimated in July 2011. Mid-level bankers get paid S$100,000 to S$160,000, and junior-level staff earn S$70,000 to S$100,000, the firm said at that time.
Those salaries probably won’t decline, especially for senior bankers, as the region’s wealth grows and the banks try to attract staff, Shah said.
Senior private bankers in Asia are also paid as much as three times their annual salaries in bonuses if they “deliver,” Shah said. That compares with about three or four months of pay in Switzerland, which, according to BCG estimates, is the world’s largest offshore wealth management center with $2.1 trillion in assets.
Asia-Pacific millionaires outnumbered those in North America for the first time last year, according to a report in June from Capgemini SA and Royal Bank of Canada’s wealth management unit.