Private Banks' Pay and Hiring Soar Across Markets

Do you want to get rich helping the ultra-wealthy manage their money? Now would be a very good time to start because after a bumper year in 2004, private banks around the globe are recruiting again.

It doesn't take a forensic accountant to figure out why. According to the Scorpio Partnership, a wealth management consultancy, global private banking profits soared nearly 50% in the first half of 2004.

'There's plenty of hiring going on,' says Ted Wilson, a consultant at Scorpio. 'It's being driven by record profitability: banks are in a position to staff up with bankers who can bring in additional assets.'

Executive search consultants confirm the trend. 'There are more than enough jobs to go around,' says Christian Sulger-Buel of Sulger Buel & Co., a search firm specialising in private banking roles. 'Most are for asset gatherers and relationship specialists.'

International banks including Citigroup, Credit Suisse, UBS and HSBC are all looking for staff, says Sulger Buel. In Europe he says, national banks are hiring private bankers in each locality too: Barclays is recruiting in the UK, BNP Paribas is hiring in France, Banca Intesa is hiring in Italy, while Banco Santander is hiring in Spain

From Offshore to Onshore

Bumper profits are not the only thing encouraging private banks to add staff. Recruitment is being driven by government-sponsored encouragement to bring assets onshore, where they can be taxed and scrutinised to ensure their legitimacy.

UBS has been at the forefront of the onshore shift. In 2001 the Swiss bank announced a strategy to develop onshore businesses in five key European markets (France, Germany, Spain, Italy and the U.K.). Since then it has added over 450 private bankers in those markets and made numerous acquisitions including Laing & Cruickshank in the U.K., the Sauerborn Trust in Germany, and Lloyds TSB in France.

Charles Gorman, a spokesman for UBS Wealth Management, said the bank is unlikely to open any further European new offices. But it is still hiring: 'We're still looking to expand organically by hiring the right people.'

New York: Brokers Drive Demand

The U.S. private banking market is dominated by private client brokers. Between them, banks such as Merrill Lynch, Morgan Stanley, JP Morgan and Citigroup, employ tens of thousands of private client brokers. And they are hiring more.

'Wealth is driving demand for brokers in the US market,' says Harry Pilkingon, a search consultant at Armstrong International who covers the U.S. market out of London. 'Merrill Lynch, UBS Paine Webber, Deutsche Alex. Brown, Smith Barney - all the big brokerage houses are hiring.'

Strong demand is pushing up prices. Private client brokers in the US are typically paid 30% to 40% of the fees they generate - this can amount to $2 million or more. To encourage top people to join, Pilkington says some houses are offering upfront payouts equivalent to a year's commission.

Zurich and Geneva: Hunters Required

The Swiss market is at the sharp end of the shift onshore. About 30% of the world's cross-border private banking assets are managed in Switzerland, resulting in the Swiss offshore banking market being worth over $1.5 trillion. However, the Scorpio Partnership's Wilson says this is being chipped away by the shift onshore.

Dr. Bruno Slongo, a consultant specializing in private banking appointments at executive search firm Heidrick & Struggles in Zurich, says competition from onshore rivals is prompting private banks in Switzerland to hire a different kind of professional. 'Money used to flow to Swiss banks from all around the world,' Slongo says. 'Now it's harder to attract money and banks need to hire people who can bring in funds: they want hunters instead of farmers.'

Banks hiring in Switzerland include venerable institutions such as Vontobel, Pictet & Cie, and Julius Baer, says Slongo.

The new mentality means pay is increasingly linked to performance. Swiss banks rarely pay more than Sfr250,000 ($215,000 / €160,000), but Slongo says bonuses can now reach over Sfr1 million.

London: Private Client Brokers Bring Home the Bacon

Executive search consultants working the private banking market in London report hiring from the likes of Citigroup, Coutts & Co, HSBC Private Bank, and UBS.

Simon Culliford, a director at private banking search firm Culliford Edmonds Associates, says private banks in London are primarily interested in hiring people who can bring assets with them and who understand complex products. 'Private bankers need to raise their game to create hedge fund solutions and structured product solutions.'

Most of the vacancies are for experienced hires. But there are also signs that banks are more willing to train talent in-house. Coutts & Co., Goldman Sachs, and HSBC are all hiring graduates to train as private bankers in the U.K., for example.

Sulger-Buel says private bankers in London are among the best paid in the world. Top London bankers in the traditional relationship mould (private bankers hold wealthy clients' hands and gently help them choose the right products to manage their wealth), can earn up to 500,000.

But he also says the real money in London is to be made working for U.S. banks who operate a brokerage model (private bankers telephone wealthy clients and do their best to sell them equities/bonds/derivatives or any other form of security). Private client brokers are paid a proportion of the fees they earn. London brokers bringing in 3 million of fees easily could be paid 1 million.

Frankfurt & Milan: Shortage of Experienced Staff Promotes Flexibility

Experienced private bankers are urgently required in Germany and Italy. In 2001 the Italian government offered a tax amnesty on funds invested in offshore bank accounts which were brought back into the country. About $50 billion of funds were repatriated as a result.

Alberto Gavazzi, head of the financial services division at Russell Reynolds in Milan, says Italian banks are desperate to hire bankers to deal with the newly inflated onshore market: 'Everyone is hiring private bankers in Italy right now, but there are very few people with the right experience.'

UBS and Credit Suisse are among the international banks looking for private bankers, says Gavazzi. Italians such as Unicredito and Banco Intesa are looking for staff too.

The shortage of experienced private bankers means Italian hirers are willing to be flexible: 'Banks are taking senior commercial bankers and young people with capital markets backgrounds and transforming them into private bankers,' says Gavazzi.

In international terms, pay in Italy remains relatively meagre, however. A senior private banker with over ten years experience is likely to earn a salary of €120,000 to €150,000, plus a bonus of 20% to 50%.

Sabine Wehle, a private banking specialist at Heidrick & Struggles in Frankfurt, says senior German private bankers typically earn between €250,000 and €1 million. As in Italy, Wehle says demand is strong and being driven by the repatriation of funds from overseas.

Wehle says German banks are keen to hire private bankers with existing client relationships, but shortages mean they are willing to consider everyone from lawyers to accountants, or corporate bankers: 'Anyone with a good network is possible.'