Niche skills are still in demand

But those with niche skills and plenty of imagination are still in demand. Private banks are particularly keen to recruit anyone with bright ideas about how to stop their clients turning into low net worth individuals.

In this environment, knowledge of innovative hedge fund products is a strong selling-point, together with original proposals for making money in property, private equity and a range of other assets that are not plain vanilla bonds or, especially, equities.

Dudley Edmunds, of headhunting firm Private Banking Executive Search, says: "We are finding that if we put forward people with something unusual to offer, banks are often interested even if there's a formal hiring freeze."

Sebastian Dovey, a director of the private banking strategy consultancy Scorpio Partnership, says many private banks put too much money into equities in the late 1990s as stock markets soared. When markets came back down, banks started to refocus on their traditional function of wealth preservation.

This means offering a more diversified and sophisticated range of products, leaving many equities specialists out in the cold.

The bankers in most demand are those who can bring assets with them and have the skills - often social as much as anything - to retain them. Those that have extensive product knowledge as well are offering the perfect combination, says Dovey.

Headhunters say UBS is one large bank that has been a notable hirer this year, even though along with rivals such as Credit Suisse, Merrill and Deutsche it has also let other staff go.

Christian Sulger-Buel, a headhunter at Sulger Buel & Co, says the bank has been recruiting for onshore work in the UK, Germany, Spain and France. "They are looking for producers, people who can bring in the business," he says.

Headhunters say larger firms often have an advantage in the current climate as they tend to offer a sophisticated mix of products that is outside the repertoire of other houses.

Alternatively, boutiques with niche expertise can be attractive to wealthy clients who feel let down by the traditional players. That leaves some medium-sized players looking vulnerable, and this is being reflected in the job market, headhunters say. But no one is pretending that the job market anywhere is healthy. "For the first time in a long time, there are unemployed private bankers on the streets of Geneva," says Private Banking's Edmunds.

The job market, particularly in Switzerland, has been hit by a string of bank mergers in recent months, notably between Union Bancaire Privée and Discount Bank, and between Lombard Odier and Darier Hentsch. Moody's, the credit ratings agency, said last month it expected a big decline in the number of independent private banks in future.

Pressure from the European Union for Switzerland to disclose more about its traditionally secret banking activities is also not helping the cause of onshore Swiss banking. East Asia is also quiet on the job market front, although Edmunds of Private Banking believes it will pick up from next year, particularly in Singapore. He says: "Economic prospects there are looking sound, and wealthy Asians are changing the ways they invest their money. They are looking at a wider range of products than just the traditional family investments."

Everywhere, the gloomy overall job market is making it extremely hard for investment bankers to move into private banking, though many are seeking to do so as their own market dwindles.

Dovey says that in the past some senior private bankers followed that route, including George Gagnebin, chief executive of private banking at UBS, and Oswald Grubel, incoming co-chief executive of Credit Suisse.

But now, investment bankers have to work hard to show they have the skills to move easily from advising corporates to advising individuals and families. Dovey says: "Sometimes you wonder about their motivation. Is it because jobs are hard to find elsewhere?"

As jobs become scarcer, it may also be becoming harder for private bankers to compare their pay with that of others in the industry, or even colleagues at the same firm.

Headhunting firm TMP Worldwide Executive Search says differences in compensation structure are increasing in product area, geography, distribution channel and individual profitability.

In the past many firms gauged performance by looking at gross sales alone, TMP says. This year many are evaluating their staff, especially in sales and client service, by also looking at net sales, profitability and shareholder value added.

Base salaries have generally been frozen this year, according to a TMP survey of the US and Europe that looked at both private banking and institutional wealth management. This was especially true for senior people who already enjoyed a high base.

The survey added that bonuses this year were likely to be down 15% to 25% on average. Many bank staff appeared unprepared for a drop, however, as they felt they were working harder than ever.

In spite of the industry's problems, the survey found: "There was general acknowledgement that individuals with proven ability to generate alpha in a market where alpha has been hard to come by will continue to fetch a premium."