The dearth of talented bankers with loyal books of business has resulted in a frenzy of poaching over the last 18 months, with many private bankers jumping ship as frequently as once a year.

UBS, Switzerland’s largest bank, has grown its Asia Pacific business by an eye-watering 11 per cent in the last 12 months, flying in the face of concerns over recruitment in the region. 

Across the asset management, wealth management and investment banking businesses, Asia-based headcount soared from 6,944 to 7,684 in the 12 months until June 30 2011, compared to 3 per cent for the bank globally during the same period, according to the bank’s second quarter results published yesterday.

Although UBS did not break down sectors within regions in its results, an internal memo last month revealed that the bank's Asian wealth unit hired over 200 relationship managers in 2011 alone.

The news put shine on a set of positive results for the bank, which grew net new money for the fourth consecutive quarter, with net inflows of SFr5.6 billion compared with net inflows of SFr11.1 billion in the previous three months, despite ongoing outflows from its offshore banking centres.

The bank said in a statement: “Net new money inflows were…primarily from our strategic growth areas of the Asia Pacific region and the emerging markets as well as from ultra high net worth clients, despite continued outflows from the cross-border business relating to neighboring countries of Switzerland.”

Race For Talent

UBS and its peers have been scrambling to secure talented bankers in Asia, where the population of millionaires over took that of Europe for the first time this year, according to Merrill Lynch and Capgemini’s latest World Wealth Report. Most of the world’s largest wealth managers including UBS, Credit Suisse, JP Morgan, HSBC Private Bank, Bank of America Merrill Lynch, Standard Chartered and Barclays Wealth, have outlined ambitious growth targets in the region.

The problem is, there are not enough talented bankers with loyal books of business to go around. Those that are well-qualified can demand sky-high salaries. The result has been a frenzy of poaching with many private bankers jumping ship as frequently as once a year, according to headhunters.

“There has been a lot of job-hopping in recent years,” saysHansi Mehrotra, head of Asia wealth management at Mercer Investment Consulting. 

HSBC and Standard Chartered, which do most of their business in Asia, recently said that the dearth of experienced bankers was forcing them to pay over the odds.

In its full-year results HSBC said the cost of hiring staff was outweighing revenue growth. Peter Wong, HSBC’s head of Asia, told Bloomberg in February that the London-based bank was “well short of talent” in China. HSBC Chief Executive Officer Stuart Gulliver said he was paying more for bankers in Asia than in Britain.

At Standard Chartered, expenses soared as a result of 7,000 new hires in China. Staff expenses rose 17 per cent in 2010 while headcount climbed 9 per cent, the bank said in its full year results. Shayne Nelson, chief executive of Standard Chartered Private Bank in Asia, told WealthBriefingAsia that private banker salaries in Asia were now more expensive than anywhere else in the world.

New Approach

But things are changing. Mehrotra said more recently, poaching has become less frenzied as private bankers can no longer guarantee a book of business with them. Mehrotra said: "Now, clients are getting sick and tired of having to change their bank every time their advisor gets a better offer. Clients are becoming stickier. In the past, perhaps 60 per cent would remain loyal to their advisor. Now, it is as low as 25 per cent."

Instead, many are turning to internal training programs to “grow-their-own” talent. Some like UBS and Credit Suisse, have training academies and graduate recruitment programs. Third party consultants like Mercer run training programs for wealth managers. Asia-based website Hubbis has an e-learning site for would-be private bankers. Barclays Wealth, meanwhile, is thinking laterally - training rookies through its “Embark” program. Individuals from any background can apply to become a private banker.

Individuals including former teachers, recruiters and events organisers have successfully completed Embark.