Headhunters exploiting regulatory pressure on banks
Bank-backed asset management companies have become fertile hunting ground for recruiters due to internal job insecurity on the back of increased regulatory pressure, confirm headhunters.
Hong Kong-based subsidiaries of mainland Chinese fund managers similarly have suffered turnover in the past year, partly owing to an inability to adapt to cultural differences and internal politics.
The beneficiaries of both of these trends have been established standalone fund houses, recruiters agree.
“Bank-backed asset managers have had a torrid time and they have been our prime hunting ground,” says one headhunter who spoke on condition of anonymity. “People there have become concerned about how committed the parent company is to their business. There is a lack of security in these asset management businesses.”
He notes that cost pressures from increased regulation such as Basel III, which requires banks to hold certain easy-to-sell assets to protect against extreme volatility, has left many unable to match the pay and bonuses of independent peers.
Last week, BNP Paribas Investment Partners, a subsidiary of French bank BNP Paribas, revealed it was restructuring its business. It came after a number of senior departures including Carol Wong, who left after 15 years to join Old Mutual Group as Asia head of distribution.
Credit Suisse, Deutsche Bank and ING have all been restructuring their buy-side operations amid fallout from the global financial crisis. Both CS and DB have rolled their asset management and private banking units together in cost-cutting drives.
Michele Bang quit Deutsche Bank as deputy chief executive this year to join Eastspring (see Top 10 people moves of 2013 in AsianInvestor’s December magazine issue). This is cited as one example of how an independent fund house has been a beneficiary of the pressure on banks. Eastspring named Guy Strapp CEO in August as it seeks to increase third-party assets under management.
Investment banks have also become targets for headhunters. One headhunter cites the example of Benjamin Tsai, who moved from Bank of America-Merrill Lynch, where he was head of commodities for Asia Pacific, to AllianceBernstein as senior portfolio manager for alternatives.
“The fact that sales teams have been so heavily over-fished [means] certain fund houses are looking to take people from capital markets because their DNA is similar,” says another recruiter. “Other asset managers prefer to poach from within the industry rather than hiring from other areas of financial services and you’ve got to be quite picky in terms of choosing the right people from the capital markets.”
Still, he estimates that just 15% of movers make a successful transition from capital markets to the buy-side. He observes that they tend to be trading-orientated and find it difficult to adapt to the long-term relationships required in asset management.
Separately, Hong Kong-based subsidiaries of mainland fund houses have also seen high turnover. One example is Eugene Lee, previously global head of sales and marketing at E Fund Management, who left his role after just four months.
More recently HuaAn’s Hong Kong operations saw its leadership team resign en masse, citing philosophical differences with the parent company in Shanghai this August.
“If you are used to working for western asset management firms and suddenly you find yourself at a Chinese firm – these are essentially part state-owned enterprises that are utterly different in culture and decision-making,” adds another headhunter.
“They will pay up to get senior people. But a lot of these have investment products and systems in relative infancy and some of the internal politics frustrates the employees and they give in.”
One Chinese manager agrees, noting that not everyone adapts to its culture. In some fund firms, jobs can be cross-functional and employees may have roles outside their comfort zone, he notes.