Private bankers’ salaries have proved the most resilient to the economic downturn over the last twelve months, headhunters working in London’s financial district say.

Private bankers’ salaries have proved the most resilient to the economic downturn over the last twelve months, headhunters working in London’s financial district say. And in Switzerland, the top-end managers enjoy higher bonuses than in the UK.

Financial search firm Napier Scott’s 2009 salary and bonus survey found that those receiving the smallest reduction in remuneration over the year were in private banking, whereas those suffering the biggest salary cuts – in some instances up to 77 per cent - were quantitative financiers and analysts.

Banking and financial services recruitment firm Morgan McKinley’s experience is that many banks have tried to keep remuneration for private bankers at attractive levels this year. “As a result, in order to bring anyone into a new firm, the base salary offering has to be competitive,” Jo Stone from Morgan McKinley’s Senior Asset Management Division told WealthBriefing recently. “Bonus structures are being reviewed in many houses and are in future likely to be based on longer term revenue generation targets, along similar lines to investment bankers' new pay structures.”

Morgan McKinley’s most recent employment monitor found that the average City salary rose 5 per cent compared in March 2009 from a year ago to £52,122 ($80,739). This was also a 3 per cent increase on the previous month.

Napier Scott’s analysis of private banking remuneration finds that in the UK at top tier firms, client relationship managers salaries range from an average £180,000 at managing director level, with in excess of 12 years industry experience, down to £50,000 for an associate, with 3-6 years’ front office experience. Bonuses ranged from £290,000 at MD level down to £45,000 for an associate.

While Swiss-based MD’s salaries are similar to their UK counterparts, their bonuses are considerably more - an average £485,000. However, more junior staff earn less than their UK counterparts, with associates earning an average £40,000 basic and £35,000 bonus.

Dubai on top

MD’s in the Middle East at Dubai-based international banks receive the highest basic salary globally at £200,000 with a bonus of £255,000 and whilst associates earn £50,000 basic salary, their bonuses are the highest globally at £75,000. Russian MDs based in Moscow make a basic salary of £180,000 with a bonus of £290,000, whilst associates earn an average £44,000 with a bonus of £30,000.

Whilst hiring freezes are in place at some wealth management firms, experienced private bankers who have a strong network of contacts are still in demand as they can immediately add value to a business. Despite some high profile redundancies, the availability of talent within the private banking marketplace in the UK and internationally is still relatively low with private bankers reluctant to move firms in the current market. Inhibiting factors include both fears around job security and an unwillingness to take a cut in potential earnings in the short term as they re-build their client base.

”The recruitment market is quite tight at the moment but there is huge potential,” said Dudley Edmunds, co-owner of wealth management recruitment firm Culliford Edmunds Associates. “Compensation levels have remained fairly constant over the last 12 months although there have been one or two banks bucking that trend,” he said.

However, better remuneration and a wider product range to be able to service their clients more effectively are the key inducements to move firm. The credit crisis has led to more bankers considering what were once regarded as “unfashionable” firms which have been less affected by the downturn.

“These include small Swiss banks which have been less damaged by the fallout from sub-prime and the credit crisis. No banker is going to risk taking their clients to a firm that has been deeply affected by the credit crisis at the moment. They are reassessing what’s important,” said one banker who preferred not to be named.

“Private bankers who already have a strong network, are tending to lean towards the smaller European local players with good brand names rather than the large, international banks,” said Morgan McKinley’s Ms Stone.

Although rumours abounded earlier in the year of a glut of worried investment bankers competing with private bankers for roles, those investment bankers who suddenly develop a lifelong desire to be a private banker are largely met with scepticism.

Mr Edmunds points out that most wealth management firms recognise that the majority of investment bankers only make the switch as a short term option whilst investment banking is in the doldrums. “As soon as the investment banking market picks up they will be back off to much higher compensation levels leaving the wealth management firms with open spaces,” he said.

“There have been some instances recently of top investment banking sales people being offered roles in private banking but these are exceptions rather than the norm,” said Ms Stone.

One recruiter said that this is the third or fourth time investment bankers have moved into the private banking industry in a downturn, only to return to investment banking in the boom times a couple of years later. The recruiter, who preferred not to be named, questioned why a firm would pay between £250,000 to £400,000 for an investment banker who is totally unproven, when they could get a private banker for less who might be able to move half their £200 million book within a year. However, he acknowledged that in smaller markets such as Russia, Turkey and Greece and some Scandinavian countries a move from investment banking to private banking can be successful.

Demand for private bankers is not universal across the board and there are particular pockets where certain skills and experience are particularly sought after.

“Some firms are building up niche teams within areas such as credit lending and emerging markets so private bankers with knowledge of these areas are also sought after at the moment,” said Ms Stone. “There is high demand for private bankers with existing books of UK resident domicile and non domicile clients, as well as Latin American, Spanish and Emerging Markets networks.”

Other recruiters note continued heightened interest in those bankers specialising in the NRI space, as well as in Middle Eastern bankers where a number of the hires that the big firms made in the region around three years ago are now looking to move on again. Whilst the market for UK private bankers has slowed, there are roles in the growing area of intermediary sales and for bankers specialising only in the res non-dom market. However, as some wealthy Russians have seen their portfolios fall in value by some 80-90 per cent, the market for bankers serving this segment has contracted.

Private bankers are under considerable increased pressure to bring clients with them and without a book of business, it is difficult to move in this market, although not impossible. Experience continues to be crucial for hiring firms where the focus at the moment is very much on bringing on board asset gatherers rather than pure relationship managers.

“Equally, in the current market, firms are only really interested in those private bankers who can bring a book of contacts with them relevant to the team they would be joining, and therefore an ability to add value from day one,” says Ms Stone.

However, opportunities remain for those firms that provide the right package and working environment to potential recruits. “The wealth manager that can think broadly and boldly and outside of the box is in a position to hire some truly outstanding staff,” added Mr Edmunds.