2020 Investment Banking recruitment trends & salary SG

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2020 Investment Banking recruitment trends and salaries in Singapore

An Ethos BeathChapman Banking and Financial Services perspective on what hiring managers should know in today's market.

By: Cherrie Lim, Banking and Financial Services

2019 IN REVIEW

Profitability under pressure
The financial services market had been slowing down since last year, and many bankers we had spoken to saw this coming. Profitability was under pressure from higher costs and higher capital requirements, which drove banks to craft out ways for new avenues of growth, create efficiencies, invest in technology or digital transformation.

Cuts across all banks
With that in mind, 2019 started on a pessimistic mode with a number of retrenchment and cuts at senior level (mostly VPs and above) or in more extreme cases, we saw certain teams pulled out of Asia completely. Last year alone, the actual number of front office cuts that took place across banking was shocking, especially given the slight trimming over the past five years. As most banks here aggressively pushed for cost cutting, the cuts applied to all tiers of banks - be it the bulge bracket banks, international foreign banks, or boutique investment banks.

Cautious hiring
The sluggish market and soft results affected sentiments and hiring amongst the banks. Hiring managers have been more cautious when hiring, and would go through a few more due diligence checks to ensure they bring in the “right candidate”, as they would not hire for the sake of it. Headcounts were usually approved for replacement hires, although in some cases, replacements were not even necessary. Senior candidates would usually be at higher risk when it comes to cuts, given their higher cost to the business.

However, not all is bleak, as there were pockets of growth in certain areas.

“Hunters” to expand Asian base
Demand for good corporate or commercial banking relationship managers remained, especially at a mid to VP level. Asian banks were aggressively looking for such candidates, especially if these individuals come with good relationships and are “hunters”, as these banks look to expand their customer base in Asia.

The corporate banking space continued to provide foreseeable growth and diversification benefits for banks, as they provided corporates with loans and credit lines to fund their expansion and working capital requirements. This demand was also fuelled by increasing foreign direct investments, inducing corporates to seek longer term or complex financing, giving banks the opportunity to deepen their involvement.

Demand in certain segments
Private equity hiring remained constant with low volumes. Within the investment banking sector, there were still pockets of demand for M&A advisory, coverage bankers and specific sector specialists.

New hires and retention

Most demand had been for experienced analysts or associate-level candidates. More specifically, 2nd year analysts to 2nd year associate candidates were in highest demand by top bulge bracket banks and boutiques. As such, candidates were usually not active in moving to another sell-side shop, or no longer keen to remain in the sell-side. Private equity / corporate development are common landing spots for such candidates. Investment banking analyst programmes have historically been a three-year cycle before associate promotion. However, many banks unofficially reduced their cycle to two years, and were increasingly promoting a large number of analysts earlier, with the goal of increasing retention rates. Also, some senior analysts and associates were bonded or given attractive pay-out schemes if they stayed a full year.

Coverage model

For investment banking coverage, some banks moved into or tried the coverage model where investment bankers were more focused on origination. This gave bankers a chance to focus more on relationships, while leveraging their technical capabilities and investment banking foundation. Also, it moved them away from pure execution, which some candidates found interesting. The private banking sector was also adopting a similar model, where they want senior investment bankers to manage investments for high net worth clients, rather than just corporates.

Growth sectors

Technology and healthcare sectors flourished, and more recently, the oil and gas markets have improved, resulting in a demand for good oil and gas candidates.

Expansion areas and new growth
In 2019, we saw more bankers leaving banking and pursuing something entirely new, in fintech or start-ups, due to the rapid–growth of entrepreneurial tech start–ups. Usually, such candidates want a fresh perspective and are willing to take a cut in salary while being compensated on other things like long term earning potential, and equity. This space is vibrant, and made a few key high-profile hires in 2019.

VC firms were also aggressively expanding their investment teams as activities ramped up across SEA. They like candidates who have a wealth of experience in start-ups, or was previously a start-up owner, and possess an entrepreneurial mindset. We saw a lot more requests from bankers looking to switch over to corporates as well, especially in corporate development or treasury roles, given the stability and longevity there.

Recent reforms in Hong Kong and mainland China are likely to further spur the growth of equity markets, with new listing rules attracting prominent technology and biotech firms to list in Hong Kong. Some of the (debt / equity) capital markets teams in Singapore had also shifted operations there, in recognition of the higher volume of work there.

2020 OUTLOOK AND TRENDS

Growth in transaction banking & sustainable finance
In the first half of 2020, we will see quite a bit of expansion within transaction banking, and this area is expected to grow for the foreseeable future. Building on the growing shift of trade to Asia, most banks will be looking to expand beyond their traditional remit into transaction banking / trade finance / cash management. They are increasingly committed to digital transformation and technological innovation, deepening core relationships with clients within the corporate and commercial banking ecosystem.

A key growth area is in sustainable finance, with a few banks jumping on the bandwagon to start such teams as Singapore looks to contribute to sustainable economic development in Asia. It is reported that over SGD $6 billion worth of green bonds have been issued in Singapore to date.

Automation, efficiency and consolidation
Banks will focus on increasing financial services access and offerings, and frontline bankers will not be affected as much by technological advancements, compared to their middle or back office colleagues. Instead, with the advent of new technology, we will be seeing more convenience as we automate some administrative tasks, freeing up time to engage with clients, perform detailed analysis, negotiating deals.

Over the next few years, banks will still look to realign their strategy and trim irrelevant costs, potentially looking to merge certain teams or functions along the way.

Asian languages
Banks will be looking out for strong candidates who can speak a different language in addition to English, as they can value add transactions. Native Thai, Bahasa or Vietnamese speaking candidates would be highly valued. We foresee some struggles that will still persist. Good talent on the ground remain scarce in the emerging markets (Thailand, Vietnam, Indonesia, Malaysia), and remain a challenge to recruit.

Despite 2019 being an employer’s market, some firms are still willing to pay for good talent. Q1 / Q2 of 2020 will once again be the most active time period for investment banking hiring.

Our 2020 recruitment trends and salary report serves to guide hiring managers and investment banking talent in APAC seeking advice to navigate this challenging market.

For a tailored consultation or detailed discussion of total compensation, bench marking and structures, connect with me: cherrie@ethosbc.com(R1548449).

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