Investment bankers’ pay unlikely to be hit by market slowdown, momentum holds for junior hires

AMID a slowdown in deal-making volume and subsequently lower fees, investment bankers in Singapore are still holding on to eye-watering salaries, with talk of yet another round of raises to come this year. 

“(Demand) is coming from more firms coming to Singapore,” said Bryan Law, head of investment management and markets at Selby Jennings, noting that there were more asset managers and family offices setting up shop in Singapore in the last few years. 

The average annual salaries of fresh investment bankers, or at least those in major international banks, range between S$120,000 and S$150,000, as indicated by human resource companies The Business Times spoke with. 

In the first half of 2023, investment banking fees generated in Asia-Pacific (Apac) were down 20 per cent year on year – the lowest first-half period since 2020, Refinitiv data showed. 

Excluding Japan, the region’s total fees generated from investment banking activities totalled US$12.8 billion, making up a quarter of the total fees earned globally. 

The region ranked ahead of European investment banking fees, which accounted for 23 per cent of global fees. 

Industry watchers noted that demand for investment bankers remains strong, amid a tight talent market. 

Ignatius D’Cruz, manager of funds, trust and commodities in banking and financial services, Randstad Singapore, said financial institutions have been offering prospective talent starting salary increments of between 5 and 10 per cent over the last two years. 

As banks seek to focus more of their efforts in emerging markets such as Indonesia, Vietnam and the Philippines, they need more analysts to help them build new business capabilities, he said. 

“In a talent-short environment, employers will have to match rising salary expectations to be able to secure new headcount,” D’Cruz added. 

On the deal-making front, transaction volumes in Apac excluding Japan fell 37.5 per cent in the first half of 2023 to US$340.6 billion. This is the lowest first-half period in a decade, Refinitiv analysts said.

The fewer deals recorded have led to a series of street-wide headcount reductions by various major investment banks, including Goldman Sachs. It announced in June that it would cut more than 30 investment banking jobs in Asia. 

Banking giant Morgan Stanley was also reported to be considering a 7 per cent cut in its Apac investment banking workforce – equivalent to about 40 jobs. 

These cuts have largely been focused on the senior level, to maintain agreeable cost-to-income ratios, said Rahul Chawla, head of human capital solutions for South-east Asia at Aon, given that compensation costs for individuals at these levels are often seven digits.

Junior-level investment bankers, on the contrary, have not been affected, Chawla added. He noted that there has been a 19 per cent increase in the group’s remuneration over the past two years.

“While deal making is slowing down, banks still need to be competitive for cutting-edge entry-level investment banking talent,” he said. 

Rising demand for the same talent pool has supported salaries, too.

Selby Jennings’ Law said he has observed more investment bankers leaving for buy-side roles in recent years, as talent recruitment heats up in Singapore. 

Also adding to the hiring competition is a rising number of crypto and fintech firms seeking to hire from the same pool of investment bankers for their expertise in fundraising. 

“If you don’t increase their salaries, then naturally, those guys won’t be happy,” Law said. 

“It’s more so that there has been more demand for this kind of talent in the last few years… that’s contributed to a little bit more people leaving recently.”

It remains to be seen where the future for investment bankers is headed, however, as markets watch for signs of a potential recession. 

“With deal-making activity low this year, we expect to see a slowdown in terms of hiring for investment bankers,” said Aon’s Chawla.

Nevertheless, companies are still willing to pay for quality talent with market knowledge within their countries of origin, as this will help firms better understand the culture and dynamics of the people, and strengthen their deal-sourcing ability, said Randstad’s D’Cruz.