Stability, profits and pay boost pulling power of Singapore banks
Now could be a good time to send your CV to a Singapore bank. The city-state’s three local banks are racking up healthy profits, rewarding their CEOs well, and maintaining their reputation for financial strength. These factors, say recruiters, will help them hire better talent this year.
OCBC, DBS and UOB are ranked second, fifth and sixth respectively on Bloomberg’s survey of the world’s strongest banks, released earlier this month. And they make up the top three on Global Finance magazine’s new list of the safest banks in Asia.
The firms are making money, too. DBS, Singapore’s largest bank, posted record net profits of US$2.8 billion for 2012. OCBC’s 2012 profits surged 73% compared with the previous year, while UOB’s were up by 21%.
“These positive results show the success and stability of our banking institutions. Since pay and performance are linked, these results also show in the levels of CEO pay in Singapore,” said Fermin Diez, head of talent for Asia, Middle East and Africa at Mercer, a consultancy.
Piyush Gupta, the CEO of DBS, took home $8.6 million in 2012, putting him ahead of his UOB and OCBC counterparts, who were paid $7.2 million and $4.5 million respectively. Given that DBS’ earnings and assets are still less than those of most large Western banks, Gupta’s compensation compares well internationally. HSBC and Bank of America, for example, paid their CEOs $11.1 billion and $12.1 billion respectively.
The pay of Singapore bank CEOs isn’t only driven by profits. Other performance indicators, like total shareholder return (TSR), a measure of stock performance over time, are also taken into account, said Diez. “Compared with a wide group of Western banks, the three Singapore banks show significantly higher TSR over the last three years, and even over the last five,” he said. “As CEO pay should rightly be driven by performance, it’s logical to expect local bank CEOs to command substantial pay.”
The recent performance of Singapore banks is also making it easier for them to compete for candidates with international banks. “Successful institutions are always attractive to talented individuals,” said Diez.
Farida Charania, chief executive of Singapore search firm Nastrac, added: “When good results and pay information is made public, it sends a message that these banks have done well and it makes them more visible and desirable.”
The hiring clout of Singapore banks is also helped by the bad news that’s come out of Western banks in Singapore over the past year. Most have reduced their hiring, while firms like Credit Suisse and Barclays have offshored back-office roles. Bonus caps are also making European banks look less attractive.
“During the current economic downturn Singapore banks have been better able to attract talent than the larger Western banks as the regulatory framework and public scrutiny in the West have made hiring more onerous,” said Gary Lai, managing director, Southeast Asia, at recruiters Charterhouse, in Singapore.
While Singaporean banks prefer to hire locally, they still consider overseas candidates if there is a skill shortage. For example, as we reported last month, DBS is open to foreign fixed-income bankers.
“For senior bankers, the benefit of the strong Singapore dollar and low income tax rates will mean their net pay in Singapore is highly competitive against, if not better than, their counterparts’ pay in London or New York,” said Pan Zaixian, general manager of Singapore search firm Kerry Consulting.