Sub-prime crisis, keen competition and cost increases are changing the game.

(SINGAPORE) Private banks are growing cautious about taking on staff here, with headquarters hit by massive write-downs from the sub-prime crisis in the US, sources say.

‘The banks won’t admit this but they are probably not as aggressive as before,’ said Gary Lai, manager of search firm Robert Walters’ front office banking practice.

Private banking has taken off in Singapore in the past two years. Assets under management have grown to an estimated US$500 billion this year, leading to a shortage of staff.

In some cases, banks have poached entire teams, offering to double salaries.

Hiring won’t grind to a halt but ‘will slow down to some extent over the short to mid term’, said Kelly Services, another recruitment firm.

The sub-prime crisis is only one reason. Others are intense competition and high costs, Kelly said.

The collapse of the US sub-prime mortgage market in the third quarter of this year has led big institutions like UBS, Citigroup and Merrill Lynch to write down more than US$45 billion of assets so far.

Citi, for example, took a US$6.5 billion write-down in Q3 and could write down a further US$8 billion to US$11 billion for Q4.

It is not alone. Merrill has made write-downs of US$8.4 billion, while UBS has taken a loss of 4.2 billion Swiss francs (S$5.4 billion). These amounts make other losses - such as HSBC’s US$3.4 billion so far, Barclays’ £1.3 billion (S$3.9 billion) and Credit Suisse’s 2.2 billion Swiss francs - look small in comparison.

Ensuing turmoil at corporate headquarters could affect hiring in other parts of the world, especially at banks badly hit by sub-prime write-downs, according to industry sources and recruitment firms.

UBS, for example, has slowed hiring for its trainee programme, a financial adviser said.

It ‘used to aggressively look for people, asking bankers to see if they knew people interested in it. But that has stopped’, the source said.

At Citi, ‘they have even cut things like staff social programmes for gatherings or drinks’, said an investment strategist.

Banks have made public their intention to cut staff - but mostly in the US and UK, where investment banking centres are based. However, ‘I would find it unusual if Singapore was not affected’, the strategist said.

Even if Asian private banking units are out-performing, ‘at banks that will or have cut jobs, if a unit is seen to be aggressively hiring it sends the wrong signal to the rest’, said Robert Walters’ Mr Lai.

Banking divisions in Asia are ‘isolated to a certain degree, but at a big corporate, depending on which bank we’re talking about, you can have across-the-board reductions’, said Joshua Yim, chief executive of JCG Search International.

It is ‘not a complete freeze’ but banks are less aggressive than they were just five months ago, and some - in particular those hit by the sub-prime crisis - are cutting back, he said.

However, insiders and the banks themselves say rumours of a hiring slowdown are unfounded.

Private bankers at UBS and Credit Suisse told BT that there is little sign of cutbacks and their departments are still growing aggressively.

Officially, UBS - which set up a Wealth Management Campus in Singapore in April - said it ‘invests significantly and for the long term in its people and infrastructure’.

The bank plans to increase the intake for its Wealth Management Associate Programme from 46 this year - out of more than 2,800 applicants across the Asia-Pacific region - to 60 next year, according to Tee Fong Seng, its head of Wealth Management International, Singapore.

Merrill Lynch, too, said it is ‘on track for another stand-out year’ in the Asia-Pacific and is ’still aggressively looking for the best and brightest to join our ranks in global wealth management’.

Citi Private Bank said it will continue to grow in strong double-digit percentage terms in the short to medium term. And going into 2008, it ‘will continue to recruit the appropriate talent in order to match our business expansion and growth needs’.

Others, like Standard Chartered, Julius Baer and LGT are still taking on people, according to Sarah Butcher, editor at website www.efinancialcareers.com.

Barclays Wealth Management is also looking to hire 800 people worldwide and ‘quite a few will be in Singapore’, she added.

‘If anywhere is affected, Singapore private banking would probably be the last place’, said Ms Butcher.

Salaries are rising faster for bankers than for any other sector, according to Mercer HR Consulting.

Mercer’s latest survey, released in September, said salaries in finance jobs in Singapore are expected to have risen 5.6 per cent in 2007, with variable bonuses up 28 per cent.

The financial services sector is still growing strongly, said Mercer’s managing director for Asean, Wong Su-Yen. ‘It is doing better than any other, with the possible exception of property.’

Source: Business Times