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Sunday, 17 August 2008

Clouds gather over bonuses

Mr Lee, who is in his 40s and a managing director at a foreign bank based in Singapore, is bracing himself for sharply reduced bonuses.

“We're still okay right now, but I'm worried for my situation if the condition does not change in six months time,” Mr Lee says.

Mr Lee's plight represents a growing concern among finance industry executives who realise they have little choice but to lower pay and hope for a rebound next time round.

Compensation experts are tipping annual bonuses to fall by as much as 40% this year, as the subprime concerns loom large and the sentiment in Singapore's financial sector remains cautious.

Pernille Storm, director of banking and financial services at Hudson Singapore, says investment banking has been hit the hardest as significantly fewer deals are being managed, but even within corporate and transaction banking, “on target” bonus expectations have moved down from six-months to around four-month bonuses.

Given the harsh environment, banks are eager to conserve cash and hold on to key employees. As a result, many of them now focus on other forms of monetary compensation. These include share options to reward their employees and non-monetary ones such as flexible working arrangements and recreation benefits, says Robert Half Singapore's managing director Tim Hird.

That said, actual bonuses this year proved higher than predicted as many banks paid up to avoid losing their top dealmakers and traders. And now, observers reckon the same scenario might just pan out when bonuses are next paid in February/March 2009.

“Those on the sell side who continue to bring in sales and revenue for their bank will continue to get their bonuses and increments,” predicts Lionel Lee, assistant regional director for Asia at Ross Human Directions.

Tan Soo Jin, vice-chairman of executive search firm Amrop Hever Group, believes for next year, bonuses will be significantly lower unless the person can deliver.”We do know that, even in bad times, some people can perform better than others,” he says.

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