eFinancialCareers

What’s happening, who’s hiring and how much are they paying in the world of private banking?

What’s the temperature?

Consistently warm. Deutsche, UBS and Citigroup have all issued profit warnings this week, but their private banking and wealth management arms weren’t to blame. UBS stressed redundancies wouldn’t hit its private banking arm and Deutsche Bank described private banking as ‘stable’ – private banks have remained largely sheltered from the credit crunch fallout and there is a generally positive sentiment in the industry.

It helps that, until recently at least, the rich were richer. The 2007 Merrill Lynch/Capgemini World Wealth Report found 9.5m people hold more than US$1m in assets, an increase of 8.3% on 2005. Private banks have benefited as a result – wealth management consultancy Scorpio Partnership says operating profits have grown by a median of 24% since 2006.

Who’s hiring?

Everyone. But don’t get too excited. Gone are the heady days of 20-at-a-time recruitment: private banks are instead hiring on an opportunistic basis.

Rodolphe Mortreuil, of headhunter MKMC, says: “If you find good, talented, people everyone in the market is prepared to talk to them. You just have to make a case for it. Everyone is keen for growth, but not in an all-guns-blazing process.”

The largest player in the market, UBS Wealth Management, has seen reshuffles in its client services and is keen to hire – headhunters say it has taken on more than 20% of its 300 private client advisers this year to date. Julius Baer is said to have poached over 100 staff from Credit Suisse alone, which has left the Swiss giant keen to fill the gaps. ING is opening a London office and is rumoured to be offering ‘golden handshakes’ to lure top-class client relationship managers. BNP Paribas has plans to increase its 850-strong client advisors team by 10% over a two-year period.

At a grass roots level, Barclays Wealth is still touting its Embark course for new private bankers, as well as its Private Banking Executive wealth management course.

Who are they hiring?

The age-old story about demand for private bankers exceeding supply continues, but it seems the quirky avenues wealth managers once explored to find new talent – the army, ex-footballers and the hotel business, for example – are no longer pursued.

Closer to home, commercial bankers are being looked at for private banking roles and Coutts is said to be poaching out of the retail banking sector. Barclays has concocted a list of qualities it looks for in its new private bankers, which range from “creative thinking” to “integrity”.

But Mortreuil believes the barriers to entry have gone up: “Nobody wants an average banker, everyone wants an exceptional one. It’s a chicken and egg scenario – nobody wants to train. The will to hire is not the problem, but they refuse to lower their standards.”

How much are they paying?

Tricky question. The top-end base salary for a private banker is £115k to £120k, but this is only the tip of the iceberg. The big money is in the bonuses and most banks pay commission or discretionary bonuses of 25% of revenues. The average in Europe used to be 35% and some banks are rumoured still to pay this.

“I keep telling people it’s fruitless to demand too much of a salary,” says Simon Culliford of headhunter Culliford Edmonds. “The higher the salary, the greater pressure to perform.”

One thing’s for sure, there is a trend against discretionary bonuses, and bankers are instead playing for indexation and revenues.

“People don’t care about base any more,” says Mortreuil. “They have faith in their own abilities.”

Future?

Global wealth is growing, so there’s an increasing amount of business to tap – particularly in hot spots like Asia and the Middle East. The question is whether private banks are positioning themselves for enough market penetration. Global wealth is predicted to rise to US$51.6 trillion by 2011, growing by 6.8% a year.

Mortreuil claims private banks are to some extent failing to connect with their clients: “Nobody goes to a private bank for performance, they go for flattery. It’s like Formula One racing, they are all one hundredth of a second apart.”