Market Update

Q4 2012

Themes in Financial Services & their impact on hiring


Theme
  Impact on Hiring
In the News - Scandals & Regulations
  • High profile banking scandals
  • Governments coffers are replenished by banking fines
  • Banking developments such as Dodd Frank, Volcker Rule, Basel III, Libor Review, Counter the Financing of Terrorism (CFT), Anti Money Laundering (AML), Foreign Account Tax Compliance Act (FATCA) and the designation of tax crimes as money laundering predicate offences by the Monetary Authority of Singapore (MAS)
 
  • Regulatory related finance, capital management, risk and control hiring at the expense (downsizing, and in some cases the complete dissolution) of some front office business activities
  • Regulated related hiring do not tend to attract as much pay premium compared to business growth related hiring
  • More risk and control roles are created at the business and functional levels as a first line of defence but not all are new headcounts as some of these functions are designed to be absorbed by current headcount
  • Risk managers with multidisciplinary / enterprise wide skillsets are in favour, relative to experience restricted to single discipline domains
  • Private banks are more compliance focus and stringent on hiring quality bankers with a compliant and transferrable client base
  • Banking is less seen as a career of choice; this is also evident among many senior bankers who are now more likely to consider non-banking opportunities. This trend has continued since the GFC
Job Cuts Goes Up – Share Price Goes Up?
  • The capital markets seem to favour banks which have made bold announcements in restructuring
 
  • Shareholder and governments pressure on the boardroom to restructure the business. Terms like ‘’rightsizing, smartsizing, redeployment, delayering, workforce optimisation’ have become popular euphemisms for layoffs
  • Banks which are laying off will still hire strategically or opportunistically but the vacancies now take on an additional lag time of up to 4 weeks before being opened up to the external market for hiring as HR is careful to first offer the opportunities internally
M&A - Impact on Headcount
  • Sale of bank assets, ie. disposal (or separation) of asset management, private banking businesses, Asian franchises
 
  • Some movements (departures and hirings) in the affected businesses as the acquirer seeks to reduce duplicated headcount and achieve revenue growth at the same time
‘One Bank’ Concept
  • Continued push towards the ‘One-Bank’ concept to create efficiencies across silo business units by sharing a single shared service centre across banking activities ie. merger of the back office for both Investment and Private Banking.
 
  • Some jobs are made redundant and attrition in affected areas are not back filled with replacement hires
  • Some replacement hires are offered on a contract basis or their employment are parked under a vendor for headcount management purposes
  • Contract hires tend to stay as contract headcount due to general constraints on putting on permanent headcount
Hubbing – What comes ‘’In’’ must go ‘’Out’’?
  • Onshoring of shared service centres (finance, operations and technology) to Singapore seem to have peaked off from the heydays between 2004-10
  • Redefinition of the ‘value chain’ for roles that are ‘value add’ enough to remain in Singapore and which are not
  • Continued offshoring of roles (previously onshored here) out of Singapore; alternative destinations include Philippines, India, China, Malaysia and Poland
 
  • Where job opportunities do exists, internal hires (including across geographies) are encouraged as an internal mobility policy, hence the best person in the external market may not be offered the job
  • Skillsets preferred are more enterprise wide across domains ie. from operational risk managers to programming languages for developers
  • Review of vendor or outsourced agreements with third party suppliers lead to a downstream impact on cost and headcount review at the financial institution providers
Technology & Operations – Staying Invested
  • Developments relating to payments, social media and enterprise wide core systems and other industry wide initiatives
 
  • Banks which have been behind the technology curve are investing in technology hires and project managers for implementation work
  • Some investment in back office technologies and hires from a risk and control perspective, as a technology safe guard to front office activities
  • Other industry wide programs such as the central counterparty clearing project and next generation payments network led to some hiring
Investment Banking - On the Downtrend
  • P&L focus has been weighted towards corporate banking and transaction services areas as opposed to investment banking
 
  • Corporate banking (rather than investment banking) profiles have been preferred for senior leadership roles in banks
  • Functional hiring (such as those in finance and operations) has tend to be aligned towards corporate and transaction banking areas
Wealth in Asia – Glowing Reports
  • Asian wealth is growing at a faster pace than anywhere else around the world amid tepid market conditions
 
  • Banks are continuing to focus in the privileged banking or wealth management space. But they are also more stringent on new hires and managing out underperforming bankers over a tighter schedule (within 6 months)
Focus is on Asia - not the Submerging Markets
  • Asian banks have stepped in to fill up the void left by the affected foreign investment banks
  • Asia strategy focus across many institutions
  • A stint is Asia is now considered essential for a career at head office
 
  • Creation of new desks and initiatives have resulted in new hires
  • Asian and Asia experienced hires are more sought after in the external hiring market
  • Mandarin competency affords a candidate with more flexibility for middle / front office roles
  • People are more open to and accessible for roles with Asian institutions
Employment Visa – Singaporean Friendly
  • Rules have been tightened again after the 2011 general election
  • Personalised Employment Pass (PEP) eligibility criteria has been raised significantly
 
  • Disinclination on the part of hirers to interview non-Singaporean/PR graduates or those who are near the salary level criteria, as they may not get approval for employment visa
  • Increase in applications for Personalised Employment Passes and Singapore PR as a residency safeguard, or in the belief that it helps to increase marketability for job opportunities
Low Unemployment Statistic – Not felt at Ground Level
  • Singapore’s impressive low unemployment rate of 1.9% (Q3 2012)
 
  • With general consolidation in the marketplace, the government’s low unemployment statistic comes as a surprise to those at the financial services industry
  • Many displaced profiles at the experienced VP to MD levels would consider taking a pay cut; their job search time frame can take up to 3 quarters (compared to 1 quarter during the boom years)
General Market - Uncertainty is a Certainty
  • Macroeconomic climate
  • Distraction over the US Fiscal Cliff
  • Continued imposition of high taxes in Europe and US
  • Slowing growth in Asia
 
  • Head office politics have led to some foreign institutions to reemphasize on home markets away from Asia, or in other cases, unclear strategies on how to reallocate scarce resources amongst key Asian business centres. This has resulted in the investment in strategic hires only to let them go for non-performance reasons
  • Expatriate packages are no longer common. Most expatriates prefer to stay in Singapore rather than return home; this translates to less backfill opportunities for replacement hires
  • Rotation of seconded expatriate staff from head office is being reviewed to enable more head office talent to gain experience in Asia
  • Some senior managers have been asked to take a pay cut. This is usually acceptable where there is limited alternative opportunities
  • HR has risen in influence (which is typical at times of cost containment); line managers are better at toeing the line against initiating hires without prior HR approval
  • Focus on internal mobility programs and internal resourcing capabilities to save on external hiring cost
  • Voluntary (offered over a limited window period) and/or mandatory redundancy programs are offered by some institutions
  • Some long-time employees (ie. >8 years of service) are holding on to their jobs in anticipation of a generous redundancy pay-out. This in turn limits the flexibility of the business from hiring new headcount
  • There are concerns against making career moves amidst a landscape of structural changes especially when the salary premium-to-move has fallen as companies are keeping a closer eye on costs
Hiring Heat Map

Bonus Expectation for FY12

Projected Salary Revision for 2013

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