Mac will target CSB hot shots

Macquarie is said to be keen to snap up the Australian operations of Citi Smith Barney (CSB), Citigroup's wealth management subsidiary. But what will a potential takeover mean for CSB staff?

CSB has about 200 front office advisors in Australia, providing wealth management and retail brokerage services to high-net-worth individuals. The more senior of them will have tie-in agreements with clients, so Macquarie will need to employ them in order to get their clients' cash.

"If the sale goes ahead, Macquarie will do all it can to secure the top client advisors. Any takeover will be conditional on the top-50 or so advisors coming across. The whole value of the business is with them," says Anton Murray, director of Anton Murray Consulting.

Junior CSB advisors - without protective tie-in arrangements and with fewer assets-under-management - will more vulnerable to getting axed by Mac. Back and middle office employees might fare even worse, according to Al Ritchie, director of Ritchie and Associates Recruitment.

"These jobs can often be more vulnerable than front office ones during a merger as there are many staff who perform the same role at each organisation," he adds.

As the acquiring firm, Macquarie will probably only take on the best operations people from CSB, leaving its own wealth management ops team largely intact. "Recruitment of back and middle office staff doesn't usually happen until the merged bank is able to assess how the front office is performing and how much support is needed," adds Murray.

And the financial crisis could make Macquarie even more trigger happy during a takeover. Murray explains: "In the current market, firms will be more ruthless about cutting staff. When the market is strong banks are more likely to run excess staff during the transition period."

Before Macquarie stepped into the ring, NAB has already expressed an interest in Citi Smith Barney. With takeover rumours circulating for several months and parent company Citigroup in financial strife, should CSB staff jump ship now?

Banks like UBS, Goldman Sachs, Credit Suisse and Deutsche Bank are already speaking to CSB's top advisors, says one headhunter who asked not to be named. Joining another firm is a viable option for these high-flyers because wealth management is a growth area for many other i-banks in Australia, says Murray.

The risks of a pre-emptive move are much higher for most other employees. "If there's a merger, it seems individuals will wait around and not jump ship as the redundancy package can be a lucrative amount. There is also a perception that if you go elsewhere, before taking that package, there is a chance in this current crisis that you may be laid off again after only a few months, when your payout won't be as good as at your previous employer," says Ritchie.

A major obstacle in any takeover is that CSB staff have large parts of their remuneration in Citi shares, which only vest if they are still at Citi.