RBS: it's a strain to retain and it's hard to hire

RBS has been shedding staff in Australia this year and is now battling to rebuild its headcount. But why are people leaving? And who should RBS target as their replacements?

The latest RBS employee to quit is director and equity sales trader David Iron, who last week announced his intention to join Moelis & Co. More dramatically, the bank lost a 10-strong team to Nomura in March and a further 10 fixed-income, commodities and currency traders to Merrill Lynch in January.

"RBS people are generally well regarded and it's easy to pick them off at the moment, so the bank has been a happy hunting ground for recruiters. With the right job and the right money, you can get just about anyone to leave RBS," says one headhunter who asked not to be named.

Compensation is a big concern. "Of all the global firms, RBS isn't able to come to the party in terms of base pay and the size and distribution of bonuses. It's been struggling to pay staff what they think they are worth," he adds.

And while there is a sense of recovery at other state-supported firms like USB and Citi, RBS is still seen by many as a "problem bank." That doesn't exactly aid retention.

The race to replace

RBS does plan to replace those who have left, its Australian chief executive, Stephen Williams, has said in media inteviews. Alongside several internal relocations, it has already hired traders John Manchee and Ed McCormack from Credit Suisse and analyst Andrew Lyons from Merrill Lynch. Keith Chui has also joined from Morgan Stanley.

However, recruiters still believe that in the coming months RBS will generally find it difficult to poach top talent away from international banks.

"If you are well ensconced in a tier-one firm, why would you want to go to RBS? Moreover, the bank could probably not afford to hire you - offering you a guarantee would be difficult to justify internally," comments a Sydney headhunter.

The solution, he says, is for RBS to get more flexible and consider other candidate pools such as the Big Four accountants, corporate advisory boutiques and buy-side firms. Unemployed bankers, overseas returnees and people left high and dry following poaching raids on their teams are other possible sources.

"They might not be first choice, but they are still quality candidates and for its own part, RBS still offers them a decent deals pipeline."