Bleak funding outlook could affect Singapore bank bonuses

Banks in southeast Asia are facing a raft of challenges that will lead to pressure on funding in 2014, and while this may dampen front office hiring, it is not likely to have a significant impact on middle and back office jobs.

The Financial Times reported this week that "the shine is coming off southeast Asia – the golden child of banking after the global financial crisis – as valuations tumble and competition for funding heats up across the region".

The report said a battle for funding would heat up as the US Federal Reserve started tapering its cheap money supply, and would be compounded by the region's slowing economies, debt-fuelled high asset prices and currency fluctuations.

"For banks this means declining deposit growth even as demand for loans remains elevated, according to Morgan Stanley analysts, resulting in higher costs and a battle for funding."

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Sam Belcher, MD of The Edge Partnership in Singapore, says that from a hiring perspective Southeast Asian banks are less prone to wholesale hiring or firing initiatives so there is not like to be any large swings in headcount.

"There could certainly be a slow down in front office hiring but with fairly stable functions in back and middle office it's unlikely these would be reduced significantly. This is partly reputational - Singapore banks still recall the public outcry when DBS made 900 people redundant in 2008."

Gerard Milligan, Randstad strategic director in Singapore, says the hiring outlook for the banking and financial sector in Singapore remains positive for 2014.

"We continue to see a strong demand for talent in the compliance function due to stricter global banking regulations. Similarly, the demand for private bankers is on the rise due to Asia’s growing affluent population."

He adds that technology hires continue to see strong growth to support business changes across the full project life cycle. Organisations are firming up infrastructure, specifically around regulatory and compliance areas, with a need to re-work or build systems to accommodate new changes in the region.

As far as compensation is concerned, the funding outlook may have an impact on bonuses, says Belcher.

"For the local banks in Singapore, basic salaries, particularly at the AVP level, are significantly below those paid by international banks but bonuses have been competitive in recent years - and these could be reduced if performance drops."