Singapore erupts in a war for talent

Singapore has been labelled ‘the new Switzerland’ by many wealth management commentators. Its stable political environment, secrecy legislation, government investment in training and geographical proximity to booming economies have all boosted its global profile. This is starting to pay dividends for the city-state. According to current economic forecasts, wealth management and private banking will comprise five per cent of GDP by 2012. Already the foreign private banking players includes Crédit Suisse, HSBC, UBS, Julius Baer, Société Générale, BNP Paribas and Goldman Sachs. However, all this activity has been building up in a relatively shallow pool of talent, and unsurprisingly the lid has now blown off amid a frantic round of headhunting – some 33 senior staff changed hands in April alone. While the traditional strategy has been to cherry-pick one or two bankers, in the dynamo that is the new Singapore, the paradigm is to grab a team or even multiple teams in one swoop. As shown in the table below, in April Deutsche Bank has nabbed 19 staff from Citigroup Private Bank in Singapore. The majority of these have strong financial advisory capabilities. The move is bound to be an embarrassment for the recently appointed Citigroup Global Wealth Management International chief executive Deepak Sharma, who remains based in Singapore. It follows the departure of six key client advisers and their assistants from UBS Wealth Management to Goldman Sachs in March. This situation comes as no surprise to anyone. The growth targets of the leading international private banks in the region depend on massive increases in employee numbers. The banks have failed to find staff organically and so are cannibalising talent from their rivals. These new hires may bring over assets for a ‘quick win’ and sustain the stated growth target, but they fail to address the endemic lack of bankers and support staff. In the medium term, some relief may come through investments in training new private bankers. The Monetary Authority of Singapore is subsidising the education of new bankers through the Wealth Management Institute at the Singapore Management University. Crédit Suisse and UBS are currently taking a long-term perspective on what they see as a long-term growth market. The two Swiss houses have invested in substantial training programs in Singapore through their respective centres of excellence. Other international firms are still thought to be considering their options. Worryingly, it is believed that some private banks are actively encouraging younger talent to train at the Swiss houses before joining them. This piggyback tactic by the tertiary banks looks unlikely to be a winner for them. There are now more than 45 private banks with offices in Singapore, many of which were established in the last 12 months. The Monetary Authority of Singapore claims the city-state now manages $200bn (e147bn) in private banking assets. People pressure is bound to increase, as is the incidence of sharp practices. More challenges to contractual terms are likely to reach the courts, just as in last October when Citibank sued relationship managers for taking clients to UBS when they moved firm. As ever, it looks like the main beneficiary from these ructions will be the legal profession. Ted Wilson is managing partner at wealth management strategy think-tank Scorpio Partnership