The head of a Zurich-based private bank says pay rises for members of his profession in Asia will decelerate as global economic pressures and margin squeezes force the industry to curb costs.

“I haven’t seen a slowdown in compensation increases so far, but it will slow given the global state of the private banking business,” Eduardo Leemann, chief executive at Falcon Private Bank, was quoted saying in an interview, according to Bloomberg.

“You’ll see some slowdown by the end of 2011. In 2012 and 2013, we’re unlikely to see the 20 to 30 per cent growth seen in Asian relationship managers’ compensation pay,” he said.

His comments come at a time when a large gap has emerged between the remuneration of private bankers in places such as Singapore and Switzerland, with the latter seen as squeezed by relentless international pressure on the Alpine state’s tax haven status and bank secrecy laws. Senior private bankers in Singapore earn between $160,000 and $410,000 a year, while the comparative range in Switzerland is $152,000 to $210,000, according to London-based recruitment firm EMA Partners International.

So far, competition for private bankers in Asia among Western firms – such as UBS and Standard Chartered – and local players, such as Bank of Singapore and DBS – has helped drive pay northwards in the Asia-Pacific region. This publication persistently hears stories of how difficult it is for banks to recruit able staff.

The Asia expansion story has been a bright spot in a financial industry beset with worries about the impact of debt problems in the eurozone and sluggish growth in the US. And cost pressures remain a bugbear for wealth managers. In its report in the summer, Scorpio, the consultancy, said the average cost-income ratio for wealth managers last year had hit a record of almost 80 per cent, as regulatory and other costs hit firms’ margins.

Personnel

While Leemann was quoted saying that Falcon aims to increase its Asian headcount, industry-wide margin pressures will make managing personnel costs a priority, he said.

“Our clients have become more conservative since 2009,” Leemann said. “The bad news is that they are holding more cash and high-quality bonds now, meaning that the margins are less. The good news is they are much better prepared in the recent financial crisis when compared to the one in 2008.”

“It is conceivable that the bigger banks are unlikely to make this bonus package anymore,” said Leemann, whose firm manages about $12 billion in assets. “Some of our peers are seeing cost-to-income ratios of at least 90 per cent in Asia.”

Falcon, owned by Abu Dhabi’s Aabar Investments PJSC, aims to grow its assets under management worldwide by at least two-thirds to $20 billion - $25 billion in five years, of which at least $3 billion of assets will come from clients in Greater China without acquisitions, Leemann said.