Sombre bonus outlook for bank staff

Monday, Dec 10, 2012

SINGAPORE - Bank staffers here should be happy if their 2012 bonus turns out similar to last year's, while salary adjustments, if any, are unlikely to outpace this year's 4 per cent-plus inflation, say consultants.

This could mean zero bonuses - which was the case for some last year - to one month-plus bonuses for general, non-revenue-generating employees. For sales or frontline staff, those who have met targets could get as much as six months. Of course, there are always the outliers, but consultants say the overall mood is pretty conservative.

"We're in an environment where people are very conservative about pay rises," said Pan Zaixian, general manager at Kerry Consulting.

Singapore's low 1.9 per cent unemployment rate may be the envy of many but the banks here are not immune to the global cost-cutting trend in the industry. Citigroup last week said it would axe 11,000 jobs worldwide and Bloomberg data showed that financial services firms have announced more than 300,000 job cuts globally since the start of 2011.

Senior managers are unlikely to get any pay rise while for more junior staff, banks use local inflation as a guide to salary adjustment, said Mr Zaixian.

"Now, with that in mind and from what we know about the market at ground level, it is likely that adjustment can be below local inflation," said Mr Zaixian.

Inflation this year is tipped to be slightly above 4.5 per cent.

"A lot of it will depend on the performance levels of these individuals. It is unlikely that even at the junior levels that inflation-level adjustments will be a given," said Paul Endacott, managing director at Ambition Group.

"Bonuses are going to be meagre in general," said Mr Zaixian. But he noted that this is a distraction from the fact that the base pay at investment banks has been raised significantly since 2010.

"For non-front-office roles at the general level, bonus is expected to be closer to one-plus month instead of four months during the better years," he said.

"For senior management and for general front- office roles, where in good years they can expect 10- plus months bonus, this will no longer be commonplace," he said.

James Rushworth, managing director at Profile Asia, said he had seen a lot of firings earlier this year as projects got shelved and banks reined in costs further.

Bonuses would be flat or down and a lot of staff would not get any - but "secretly they would be pleased", as they would still have jobs, he said.

Local banks - which are expected to be more generous given their strong earnings - will be prudent rather than lavish in rewarding staff.

For the first nine months of 2012, the three domestic banks - DBS Group Holdings, OCBC Bank and United Overseas Bank - posted much higher profits, up at least 13 per cent from a year ago.

Regarding hiring, while the local banks are more active, it has not completely stopped at US and European units. Many banks are beefing up their compliance and corporate governance and risk management, as regulators get tough with more new rules.

"Local and global regulations are increasingly complex; hiring in compliance, corporate governance has been recession-proof," said Mr Rushworth.

A director in a regional role overseeing a compliance team could get a base monthly salary of as much as $250,000 while the boss or managing director may be paid $350,000, said Mr Rushworth.

Generally, the hiring mood in local banks is more optimistic even as growth is sluggish. The Singapore economy is expected to grow 1.5 per cent in 2012.

Local banks, however, are cautious in the pay stakes as, increasingly, more people want to work for these organisations because they feel secure, said Stanley Teo, director at Profile Asia. "They're prudent - that's why they're doing well and some people want to work for Asian banks because of the consistency," he said.

As for bonus, "very good performers should be happy if they get the same as last year, which could be six months, (because) many will get nothing", said Mr Teo, who works on frontline hires.

One trend which consultants notice is that increasingly banks are moving jobs out of Singapore to countries like the Philippines and India because costs here are too high.

"A lot of banks are not coming to Singapore," said Mr Zaixian.

Mr Rushworth said the reality is that Singapore is too expensive to employ talent in the region. Roles in technology, finance and operations at the vice-president levels are being commoditised, he said.

"A European bank looking to send jobs from London to Singapore is at the same time also sending jobs from Singapore to India," he said.

Banks are finding that for some of the back-office positions which cost $100,000 a year for a Singapore employee, they can hire two for $50,000 in the Philippines, said Mr Rushworth.