Our CEO, Declan O’Sullivan, recently shared his views with Financial Times on the reasons why the UK-based staff number opting to move to Singapore has lately been higher than usual.
Not only has the Singapore dollar strengthened against the British currency in the last two years – making it more expensive for London-based institutions to pay for staff – but also deal flow is down everywhere.
Hong Kong is in any case the preferred base for M&A bankers in Asia, even though some activity has picked up in Singapore with a S$5.4bn battle that has set Dutch brewer Heineken against Thailand’s ThaiBev for control of Asia Pacific Breweries, the maker of Tiger beer.
Where Singapore is seeing hiring growth is in transaction banking, the unglamorous trade finance and cash management services crucial to oiling the wheels of commerce.
In south-east Asia, where corporate balance sheets are relatively strong, that business is providing fat profits as companies hire banks to support their working capital needs.
Banks pushing into this area include ANZ of Australia, France’s BNP Paribas and Royal Bank of Scotland, whose global head of trade services, Anand Pande, moved to Singapore from London six months ago.
At DBS, Singapore’s largest bank by assets, transaction banking accounted for 9.6 per cent of group net profit in 2010 but had jumped to 21.6 per cent by the first half of this year, while headcount has grown 52 per cent in the same period.
United Overseas Bank, a rival, says the value of trade loans extended to customers in the first half was 18 per cent higher than the same period last year.
Tony Singleton, Asia-Pacific managing director for Reval, a treasury and risk management software group, says companies in south-east Asia are trying to maximise their return on excess cash and manage their counterparty exposures “more intelligently”.
“For their part the banks are trying to grow or protect ‘share of wallet’ and they are replacing volatile trading room income with more reliable annuity fee-based streams,” he says.
Recruiters say it is at Asian operators that most of the hiring is taking place.
Declan O’Sullivan, managing director at Kerry Consulting, says: “Working in Asian financial institutions is more attractive as they have the balance sheet and can engage in . . . activities where US and European banks have dominated.”
Elsewhere the hiring picture is mixed. While commodity trading has become a big part of Singapore’s financial sector, banks are struggling to hire as the most talented staff are poached by trading houses such as Trafigura, Glencore and Mercuria.
That has prompted banks to shift people from Europe and the US, mostly in top management positions. But these are not new jobs, recruiters say.