A year ago, FinanceAsia sat down with one of Hong Kong's top headhunters to get a feel for the market for financial jobs. The world was a very different place -- banks were still laying off staff en masse, deals had come to a complete standstill and markets had yet to bottom out.
Not surprisingly, it was a gloomy conversation. He foresaw a financial industry that would never be the same again: an entire generation of bankers was going to be pushed out of the industry and many of the business units they worked in would disappear from banks' organisational structures.
And, most important, from a banker's perspective, the days of extravagant compensation were over. That meant bonuses would be rewarded more selectively and, when they were rewarded, they would be smaller. Big signing-on incentives would become a thing of the past.
When we met the same headhunter again a few weeks ago, he cheerily told us that his earlier predictions were wrong, with respect to Asia at least.
The industry clearly got it wrong too. Markets started to pick up in March last year and a few months later the banks set about rebuilding their businesses. Indeed, many transitioned effortlessly from slashing staff to aggressively hiring, which has inevitably meant that some bankers are getting re-hired by the same institutions that had just paid them a tidy redundancy package.
And, also inevitably, the competition for talent, at least in some areas, has meant that the days of extravagant compensation are by no means over. Even US banks that got bailed out by the Troubled Asset Relief Program (Tarp) are offering generous packages that often include sign-on bonuses.
"The last three quarters of 2009 were extremely busy for us and we expect business volumes to continue increasing throughout 2010," said Simon Waterson, managing director of search company Eban. "Naturally, the greatest amount of attrition will come after bonuses are paid and this will lead to a spike in hiring activity."
This is not to say that the financial crisis has already blown over in Asia. Activity in some areas is strong and banks are responding to that, but thorny medium-term issues remain, including the threat of significant financial reforms in the US, the legacy of huge government debts in the developed economies and, closer to home, concerns that China's successful emergence from the financial crisis is simply the product of another bubble. But it is difficult for banks to take a wait-and-see attitude when there are clients who want to do deals. Instead, they are hedging their bets by expanding aggressively into new business areas that they judge to have more solid long-term potential.
"This somewhat runs against the commonly held theory at the moment that growth plans for the coming year have been largely suppressed," said Richie Holliday, managing director of Morgan McKinley in Hong Kong.
Private banking is a prime example. Senior bankers in Asia are hoping that wealth management will be the goose that lays golden eggs, based on the observation that Asia's continued economic development is creating new millionaires every day -- and the smell of new money is like crack to private bankers.
The logic is so compelling, in fact, that it is even attracting Europe's old-money bankers from the comfort of their Swiss fortresses.
Clariden Leu and Julius Baer are both expanding in Asia and have been headhunting across the region. In March, Clariden Leu hired Jimmy Lee as its new Asia head based in Singapore.
Lee joined from Deutsche Bank where he was head of private wealth management for Southeast Asia and South Asia. After this Clariden poached Kenneth Toong, also last with Deutsche, as its first chairman for Asia. Clariden has a stated strategy of hiring bankers with experience and it has been poaching these from a number of banks, including not surprisingly Deutsche, from where it has got its top bench.
Private banking is also an area that has witnessed en masse team moves, as banks seek to quickly scale up by bringing on board a team of people who are used to working together.
Barclays Wealth, the wealth management division of Barclays, appointed veteran UBS banker Srini Siripurapu to head Southeast Asia and South Asia late last year. Srini took with him a team of nine from UBS.
In the last quarter of 2009 the Singapore office of RBS Coutts lost around 70 people from the private bank, of which 20 were bankers. Some of the bankers were said to have moved to BSI, given that Hanspeter Brunner, former co-chief executive officer of RBS Coutts, and Raj Sriram, head of its South Asia unit, had earlier left the firm to join BSI - a Swiss private bank owned by Italian insurance group Generali. And banks such as Deutsche, Citi and UBS, which have strong private banking practices in Asia, are also hiring, both to fill vacancies created by departures and strengthen their offering.
Needless to say, there aren't enough private bankers in the region to fill the vacancies, so some of the new hires come from different backgrounds and are starting anew at the bottom of the ladder.
Private banking isn't the only area where banks are hiring. Sure, nobody is staffing up their prop desk right now, but the quick recovery in capital markets activity last year exposed holes in many banks' teams and they have had to scramble to cover deals.
In November last year, Bank of America Merrill Lynch lured Ranobir Mukherji from UBS to run Asia debt capital markets. Mukherji effectively replaced Jon Pratt, who left BoA Merrill in January in the wake of the restructuring following the merger of Merrill Lynch with Bank of America. And in January Citi's head of financial sponsors, Chris Gammons, departed the American bank, also for BoA Merrill. BoA Merrill's co-heads of financial sponsors, Ajay Sawhney and Richard Gibb, both left the US bank in the first quarter of last year. Rumours are buzzing that among the enticements offered to Mukherji and Gammons are large sign-on bonuses.
That may or may not be true but the timing of the hires suggests BoA Merrill will have agreed to "make whole" the hires for the bonus they will forego at their previous firms. Also in January, BoA Merrill in Australia poached a team of 11 bankers, led by Chris Thomas, from the Royal Bank of Scotland (RBS), to kick-start its fixed income, currencies and commodities business.
As a result of all this, the number of unemployed bankers in Asia is a fraction of what it was a year ago, in stark contrast to the US and Europe.
