Published by Singapore Business Reviews – 16th May 2018
Gone are the days of pure cash bonuses as bankers of the ultra wealthy can also expect bonuses in the form of stocks and shares.
As a growing number of Asia’s ultra wealthy are calling Singapore home, private banking continues to gain momentum in the lion city with bonuses of a good-performing private banker clocking in somewhere around a whopping 50% of the base salary.
This means that a managing director with more than 17 years job experience can earn as much as $200,000 in bonuses alone.
“The bonus on that would average 40-50% (given their book) which means in total Managing Directors could easily be receiving a package (base salary, bonus and long-term incentives) of close to SGD 1 – 1.5 Million,” said Nilay Khandelwal, regional director of Michael Page Singapore.
Executive director or SVP levels can earn around $137,500 in bonuses separate to their existing compensation packages. Those in the director and associate director levels can earn in between $100,000 to $150,000 in bonuses alone whilst an associate client advisor with around two to six years of experience could similarly enjoy hefty $48,000.
Private banking bonuses rose 5-7% YoY in 2017, according to Krista Espaldon, senior consultant & regional lead for private banking at Morgan McKinley. Hefty bonus packages help private banking recruiters attract and retain top talent that could draw in wealthy clients amidst growing demand for personalised banking services and limited manpower to plug the demand.
Also read: Asian private wealth hits $2.01t in 2017
“Almost all private banks have huge appetites in beefing up their own platforms across all markets, sieving through the top bankers and competing amongst each other to attract top calibre talents,” Espaldon added.
However, gone are the days of purely cash pay-out bonuses as a number of bonus packages are actually broken down into 60-40% cash and stocks/shares which are vested in two to three years.
“Quite a bit of the bonus pay-out is deferred over a 3 – 5 year period and if the bank is listed, then they do offer shares too. Usually about 25% – 40% of the bonus is deferred over a 3- 5 year period and depending on the bank, it is paid out in a combination of stocks and cash,” said Rahul Sen, global head of private wealth management at The Omerta Group.
What remains the same is the more generous compensation packages offered by foreign private banking players who dole out around 10-13% in total take home pay (including base salaries) as opposed to large local private banks who pay out a decent 8 to 12%, according to Espaldon.
Established foreign banking players like UBS continue to dominate Asia’s private banking industry in 2017 with assets under management (AUM) clocking in at US$382.7b, according to a report by Asian Private Banker. Citi snags second place at US$256b followed by Credit Suisse at US$202.1b and HSBC Private banking at US$129b. Swiss-based Julius Baer completes the top five with assets at US$115b.
“The foreign banking players are able to play slightly higher bonuses compared to Asian or Singaporean banks. This is because their platforms can support more banking products across geographies, this means that private bankers can do more for their clients than other organizations which can be at times niche and limited,” added Khaldelwal.
However, Asian banks are picking up pace alongside their European counterparts to provide customised banking solutions for the world’s wealthy as DBS was able to snag sixth place in the region’s top private banks with AUM at US$108.5b. OCBC’s private banking arm, Bank of Singapore, has around US$99b in AUM to snag eighth place. Only UOB falls outside the top 10 with AUM at US$34.3b.
“It is all performance-linked so it would range anywhere from 30% to 80%, with 50% being the average. If you are at the top of your game in private banking, you do make a lot of money,” said Khandelwal.
ERRATUM: An earlier version of this article published on May 16 misquoted private bank recruiter Krista Espaldon. She did not mention specific banks when she noted that foreign private banks pay out larger compensation packages than their local counterparts. Total take home pay was also misquoted as total revenue in the earlier story.
