A media report claimed that the market for private banking talent is running hot, with a serious mismatch of available talent against demand.

The market for wealth managers in Asia has been described in a news report as “crazy”, with claims that some individuals willing to change jobs can command rises of 30 per cent or more in Singapore and Hong Kong.

About three years ago, for example, Credit Suisse told WealthBriefingAsia that there are an estimated 7 million millionaires in the Asia region. On the assumption that a banker can, on average, handle 35 clients, that would translate into a need for 200,000 private bankers. But at the moment there are only around 10,000.

"It's a crazy market," Derrick Tan, head of Greater China and North Asia at Bank of Singapore, was quoted by Bloomberg as saying recently. 

The newswire also quoted Amy Lo, head of Hong Kong’s Private Wealth Management Association, as saying: "For a huge market like this, it's certainly not enough. That's why we are seeing a talent war. It won't be easy to retain people when they can easily get a 20 to 30 per cent premium and an upgrade in title."

The cost of doing business in Asia, such as paying the kind of salaries needed to win talent, may help to explain why some banks have, perhaps surprisingly to outside observers, sold off their Asian private banking operations. Barclays, Societe Generale, ABN AMRO, ANZ and Banque Internationale à Luxembourg have sold or shuttered operations, with players such as DBS and Bank of Singapore using the opportunity to bulk up and exploit local cultural loyalties and economies of scale. Meanwhile, international houses with big brands and certain scale advantages, such as UBS, Credit Suisse, Julius Baer, BNP Paribas, Citigroup and JP Morgan have expanded.

The talent crunch issue also highlights why Asia has seen efforts by some firms, such as UBS and BNP Paribas, to develop in-house talent and work with educational institutions. This publication spoke to the CFA Institute about the challenge of supplying private banking talent, and it remains a constant theme in the sector.

It is not always the case that private bankers at a certain level can command higher salaries regardless. There have been signs of some more senior figures being let go by firms, in some cases moving to family offices, external asset managers, and other non-bank organisations. (See an example of an interview with an industry figure discussing such issues here.)

(Editorial comment: The issue of a talent shortage, the ensuing high salary pressures and associated revolving-door culture, is not new in Asia and has been discussed for some time. Yes, some steps have been taken by banks and education organisations to address the issue, but it is clear that the sector has a long way to go. Meanwhile, the need for banks to use technology to augment what advisors can do, and boost their productivity, is likely to become ever more urgent. In fact, the supply/demand mismatch of private banking talent against consumer demand explains to some extent why Asia appears to be a leader in fintech in certain respects.)