Local banks pay the highest bonuses
Singapore - Local banks are paying staff as much as 30 months of bonus - the highest in the world - after posting record profits in 2010, yet only a few global talent would be keen to work for them.
Recruitment firms say they have been inundated with phone calls from bank executives from international firms who want to switch jobs. However, recruiters note that as local banks pay much lower basic salaries, few will decide to join them.
In the wake of the global financial crisis, local banks such as DBS, OCBC and United Overseas Bank (UOB) had all posted record operating profits for 2010. This resulted in a much larger bonus pool due to the stellar performance of the local economy which grew nearly 15% last year. James Rushworth, managing director for South Asia at executive search firm Profile Search & Selection, said, "We've met people at the local banks getting 30 months [bonus]."
Foreign banks, however, are still reeling from the crisis and the resulting pay reforms have led to banks like Royal Bank of Scotland (RBS) not paying some employees a bonus.
RBS recorded a £1.1 billion (S$2.27 billion) loss for 2010. Its chairman Philip Hampton said this has resulted in a bonus pool which has shrunk by 27%. About a quarter of the bank's 18,700 strong investment bankers will miss out on a bonus.
However, Rushworth was quick to note that the total compensation package - comprising base pay and variable bonus - for local bank staff was much lower. For example, the basic pay at US and European banks is about two to three times that of local employers.
However, Karen Ngui, a spokeswoman at DBS, said her bank's remuneration is benchmarked against both local and global banks. Ngui added, "Although DBS had record core earnings in 2010 and paid out more in bonuses, based on our benchmarking studies, in general, total compensation is still less than that of global banks."
Disgruntled staff at banks with headquarters overseas have said they should be paid more since the Asian accounts contribute the most to their banks' growth and profits. They are also upset with the pay reforms which have prevented them from receiving their bonuses in a lump sum of cash. They have to contend with deferred payments and stock options instead.
Asian banks have traditionally paid less than staff in developed markets, but they have been catching up in recent years. A senior banker at a US investment bank said the difference in pay scale has been creating tension. He added, "The notion that Asia is not driving compensation - it's a storm that is building."
But Andrew Price, managing director of recruitment firm GSP Search Partners, said Asian bankers who are unhappy with their pay have little options as foreign banks are cutting back on staff. Price said, "For all those who are upset and want to leave, it will be interesting to see if they can find something better anywhere else."
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