It’s winter in London and New York, which makes it time to think about ditching the grey drudgery of life in the Northern Hemisphere and consider moving to a market that is both expanding and sunny the majority of the time. Is this really feasible? We’ve identified four financial centres that are open to foreign professionals.
Hedge funds have been increasingly shifting parts of their operations to this Mediterranean island, largely in response to a perceived clampdown on firms from the EU or rising costs in London. Until now, they’d restricted their Malta-based jobs to investor relations and accounting roles.
Demand is slowly picking up for portfolio managers and chief investment officers, however, says Matthew Camilleri, managing director of local headhunters Castille Resources.
“There’s a trickle of front office roles emerging and more hedge funds are either transferring portfolio managers here, or looking to recruit externally. These people largely come from more established financial centres,” he says. “What’s more, there’s an increasing amount of forex brokerages, which usually look to expat talent when recruiting.”
Hedge funds with operations in Malta include Clive Capital, Comac Capital, FMG, Vector Commodity Management and BlueGold Capital Management.
FMG is a fund of funds manager focusing on emerging or frontier markets – from Brazil to Iraq – and it shifted its headquarters from Stamford, Conn., to Sliema, Malta in 2009. Erik Nelson relocated from the US to Malta three years ago as part of the move, and doesn’t regret it.
“The financial sector is at a very early stage, but slowly more front office roles are moving here and it’s really starting to boom – it’s an exciting time to work here,” he says. “The lifestyle is also nice, especially if you like sailing, and there are plenty of opportunities to get off the rock – you can easily go to the Middle East or Europe.”
Foreign talent is usually recruited for front office positions, as well as risk management and compliance, says Nelson. Portfolio manager roles typically pay €90-120k, according to Camilleri, and are subject to only 15% income tax for four years under government regulations designed to attract more highly skilled people to the island.
Bruno L’ecuyer, head of business development at promotional body Finance Malta, says that most foreign financial institutions “start with a small operation which helps to fully assess the domicile, and then go on to grow the business and transfer both back and front office work to the jurisdiction.”
It would be wrong to assume that a developed market like Australia has been sheltered from the layoffs in finance – Macquarie, for instance, shed 287 jobs from its securities division this year (primarily in Australia) and equity capital markets bankers have not fared well. But significant retrenchments on the scale of those hitting London have been rare.
The slump in M&A deal activity in Australia – from US$173bn in 2011, to US$81bn so far this year, according to Thomson Reuters – has meant that there’s been little appetite to hire big hitters, particularly from overseas, says Jason Hutchins, associate at headhunters Anton Murray Consulting. At the junior level – analysts and associates – it’s a different story.
“With overseas platforms having larger, more complex deals and world-class analyst training and development programs, managing directors are actively looking to overseas candidates to boost the ranks,” he says. “Requirements at this level are more focused on the candidate’s execution experience and technical skill sets rather than local knowledge.”
Royal Bank of Scotland’s pull back from Australia, which prompted Malaysia’s CIMB to acquire its investment banking and cash equities business in the country, has prompted some hiring, suggest headhunters, while smaller players like Lazard and Greenhill are also recruiting. Australia’s strong natural resources sector has kept foreign investment banks committed to the country.
“Areas such as actuarial, insurance, investment banking, and investment management experience are still highly sought after especially if candidates bring experience with global firms,” adds David Holden, associate director at recruiters the Emerald Group.
The real growth area in Australia is not investment banking, but wealth management providing services to the self-managed super fund sector (SMSF), claims Russell Thomas, CEO and managing director of the Financial Services Institute of Australia (Finsia). Australia has A$1.4trillion in assets under management in its compulsory superannuation pension funds, which is one of the largest in the world. This is creating jobs.
“The growing appetite for consumers to manage their own superannuation investments has driven the need for more SMSF accountants and asset allocation experts. Banks in particular have established or enhanced existing SMSF platforms,” says Thomas.
Banks are also looking for compliance experts with experience implementing Basel III and accountants with reporting standards experience in anticipation for IFRS reporting standards being fully implemented by 2015, he adds.
There were frenzied levels of recruitment in Brazilian investment banking in 2008, as all the global players looked to grab a slice of a growing market. This has long since passed, some firms cut staff at the end of 2011.Deutsche Bank has just trimmed its Brazilian investment banking team.
However, some firms are expanding. J.P. Morgan, for instance, is targeting the country, local firm Caixa Economica Federa plans to launch a new investment bank by Q2 2013 and the ever-expanding Cantor Fitzgerald has been hiring.
“There’s still an appetite to recruit among investment banks in Brazil, but making the move as a foreigner is not such an easy task,” says one São Paulo headhunter who declined to be named. “Local language skills are usually required and, as the market has developed, there’s no shortage of able candidates available locally.”
So far this year, revenues have been shrinking for investment banking – from $930m in 2011 to $830m year-to-date in 2012, according to data from Dealogic. Local players BTG Pactual and Itau BBA take the top spots, but Credit Suisse and J.P. Morgan – both of which have been hiring in Brazil in the last year – feature in the top ten, along with Bank of America Merrill Lynch, Citi, Goldman Sachs and HSBC.
“Longer term, there’s a huge buzz about São Paulo,” says Mark Yeandle, author of the Global Financial Centres Index. “Once the gloom from the crisis clears, we’re expecting hiring in investment banking, wealth management as well as more back office functions.”
Pay has been heading up for investment bankers in Brazil – typical salaries for managing directors are now $350-500k, according to figures from headhunters the Options Group.
Bermuda’s traditional strength in financial services has been as an offshore centre for hedge fund administration, but it’s now starting to lose out to lower cost destinations.
“It’s been a tough 12 months for the fund servicing industry in Bermuda, and I’d expect it to be a challenge for the next two years at least,” says Peter Hughes, group managing director of Apex Fund Services, which employs 25 people on the island. “It’s losing out to lower cost locations like Canada, as well as to outsourcers.”
So, why the fuss over Bermuda? For a start, it’s getting its house in order. Having been accused of lax regulation in the past, the Bermuda Monetary Authority embarked on a recruitment drive to attract regulatory staff from around the world. Such efforts are attracting more attention to offshore centres, says Yeandle.
Then, there’s its burgeoning reinsurance sector. Hedge funds have been rushing to start up reinsurance operations on the island, as part of an attempt to mitigate against investors withdrawing funds at the first sign of poor performance. If a hedge fund sets up a reinsurer in either the Cayman Islands or Bermuda, the regulations there allow it to use the premiums it collects to invest in the hedge fund itself.
SAC Capital Advisors has created Bermuda-based SAC Re, which is raising $500m and Third Point has also launched a reinsurer on the island called TP Re. Taussig Capital, meanwhile, has unveiled Multi-Strat Re (again Bermuda-based), which gives other hedge funds the opportunity to get into reinsurance.
“There are a lot of new roles in reinsurance that generally require expat expertise, as well as auditing and senior banking positions,” says Hughes. “Bermuda offers a great quality of life, zero tax and rents are coming down, which means it’s cheaper to live here than ever. It’s a great place for financial services professionals looking to escape London or New York.”