Bank bonuses flat; but slow job market may block exit to greener pastures

Singapore

WITH 4th quarter 2018 results streaming out, bankers may be fretting about what bonuses will be coming their way. But with a slow job market - there're more candidates than jobs - those unhappy with their bonuses may just have to sit out this job-hunting season.

As expected, bankers were tight-lipped about their 2018 awards, though one local banker said Singapore banks are likely to pay "an average 2-3 months and for those that did well, it can go up to 5-6 months, or 7-8 months." For the top 5 per cent performers, it could even be 12 months, she added.

Consultants say the latest payouts would cover a wide range from one month to 12 months, and comparatively, bonuses for 2018 would be mostly flat or worse than the year before.

DBS, OCBC and UOB will report Q4 2018 results next month (February) while many US and European banks have already announced their earnings.

With payouts determined by overall performance, different geographical markets impact a bank's bonus payments.

"For example, the performance in Asia is good but if the domestic business (say Europe) is down, then bonus may decrease from last year," said Angela Kuek, director, The Meyer Consulting Group.

She added: "The local banks pay bonus in March/April, so the jury is still out, but I would expect bonus from local banks to be flat or slightly better than last year."

At the foreign banks, Ms Kuek said bonuses this year are flat.

Whether the bank is local or foreign, bonuses are determined mostly by the same principles - with the main factors being the individual's and the organisation's performances.

Seniority of the employee - especially at the very top - also counts; as witnessed by the outsized compensation paid to some bank CEOs that have sometimes sparked outrage.

At Citi, a spokesman said its bonus amounts come from a pool determined by a number of factors, including overall company performance as well as business performance.

"How it is paid out to staff varies from one business to another," he said.

"It is not calculated in terms of months but rather as a proportion of the bonus pool apportioned to a particular business and determined by individual performance against goals and objectives for the year."

According to US-headquartered job search and review platform Glassdoor, the bonuses for Citi vice-presidents and assistant vice-presidents are S$40,700 and S$13,000 respectively.

The Glassdoor platform also showed UBS directors get a bonus of S$40,200 and for assistant directors, it's S$27,400.

Meyer Consulting's Ms Kuek said that depending on function, average bonus should be 1-2 months for mid/back office staff and 2-4 months for front office staff.

April Jimenez, senior consultant, Huxley Singapore, said: "Bonuses are lower in 2018 than 2017 - approximately 20 per cent drop even for global banks. Despite the bleak market conditions in 2018, there has been talk of bonuses with some announcements by several banks."

She added that bonuses are typically higher for front-office staff. "Bankers get a minimum of 6 months, whilst in IT, the bonuses are normally 2.5 months. Some beleaguered banks could also go at one month or less for non-bankers."

For the more experienced bankers or traders, they can expect more attractive bonuses of around 6 months to a year, Ms Jimenez said.

One also needs to consider if the bank's Asia business is the primary revenue generator. "Effectively, there may be a variation across the regions in terms of bonuses offered as well," she said.

Among global banks, JP Morgan and Goldman Sachs are among those that have awarded their bonuses.

For many, job hunting goes hand in hand with bonus time; and more often than not, it's foreign banks that may offer a premium and/or sign-on bonus. Sign-on bonuses are not a common practice among Singapore banks, said the local banker.

Ms Jimenez added: "Sign-on bonuses are definitely lower for local banks, but rates are getting competitive enough."

Senior hires moving into a global bank's wealth management unit could potential receive as much as a US$200,000 sign-on perk, highlighting a strategic move by banks to poach experienced talents, said Ms Jimenez.

Those with experience in the China market will also get more attractive benefits, she added. "Premiums are available... for bankers with experience in the China and Hong Kong markets as banks continue to have invested interest in expanding in this region." Premium refers to the amount of increment on top of the base salary.

Meyer's Ms Kuek said premiums are in the bandwidth of 10-18 per cent. She said pay premiums depend on the level of seniority, whether the candidate is currently above, at or under market, and demand for the skillset.

Lest some get carried away, Ms Kuek cautioned that the market is currently a little slow and that it's an employer's market. "We have more candidates than jobs," she said.