Published December 20, 2008

Bank staff fretting over jobs, not bonuses

Uncertainty said to be particularly bad at banks in the midst of being bought over or undergoing integration

By SIOW LI SEN
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IN a departure from their Christmas tradition, workers in Singapore's financial industry are not obsessed with their bonus - if any - this year, as they feel that job security is more important.

For those employed by US and European banks, the anxiety is especially acute because the perception is that critical decisions are taken at head office, regardless of the profitability of the Asian units.

The uncertainty is said to be particularly bad for those with banks in the midst of being bought over - such as Fortis - or undergoing integration such as Bank of America and Merrill Lynch.

'The bosses (the expats) are gone and I feel quite sorry for the staff,' said one BNP Paribas banker.

But a Fortis insider said that the anxiety is 'generic' and it's business as usual.

BNP Paribas said on Thursday that it was suspending its proposed purchase of Fortis but was still interested in a deal and was examining its legal options.

The fate of local Bank of America staff remains unclear after the financial giant said that it would slash 30,000 to 35,000 jobs worldwide over the next three years.



The bank employs more than 2,300 staff across the Asia-Pacific region, but it is not known how many work at its Republic Plaza office here. It also owns investment bank Merrill Lynch - acquired in a fire-sale deal during September's financial meltdown - which has a sizeable unit here. Merrill employs about 1,500 staff, providing both front and back-end services, in Singapore.

For the past decade, senior managers of international banks on trips to Asia would laud the rapid growth of operations here and often seek to increase headcount.

But now, with bank losses running into the billions, many of these banks are cutting staff by the thousands.

While the bulk of the layoffs are in New York or London, what tends to happen in Asia is that entire departments, previously profitable but considered 'non-core', are closed, or sold off to raise cash.

Layoffs in Europe so far have been relatively low, mainly because of stronger unions there.

But given such a backdrop, job security has become the No 1 concern.

'No one's talking about bonus. You're lucky if you still have a job,' said one gloomy ING director.

Dutch-owned ING, which received 10 billion euros (S$20.4 billion) of government money in October, has closed down its aviation finance business and sold its Taiwan insurance unit. Last week, it was reported that ING would close its commodities unit in London.

Credit Suisse early this month said that it would slash 5,300 jobs or 11 per cent of its global workforce by the middle of next year as it warned of the worst quarterly performance since it started quarterly reporting in 2001.

In Asia, more jobs will be lost in Singapore than Hong Kong, said Kai Nargolwala, Credit Suisse Asia-Pacific chief executive.

'That's not surprising when you consider that we have a Hong Kong headcount of about 2,000 people and we have a Singapore headcount of about 5,000,' he said.

As for bonus payments, staff may still get some, though, not surprisingly, the amounts would be lower than in 2007.

Citi Singapore spokesman Adam Rahman said that bonuses, if any, would reflect the tough environment. 'While Citi Singapore has seen stable growth across its businesses in 2008, we will be exercising extra prudence in awarding bonus packages given the unprecedentedly challenging year for the financial industry,' he said.

Serge Forti, chief executive of BNP Paribas Wealth Management, Asia Pacific, said that bonuses will still be paid though, obviously, they would be less than before.

A UBS spokeswoman told BT that 'compensation levels this year will, in part, be dictated by the profitability of the firm as well as the competitive environment'.

RBS, which expanded its operations in Asia following its ABN Amro Bank acquisition, said that final decisions on bonuses would be taken following the year-end results, once the performance of individual businesses is known.

'We are also mindful that we have 170,000 staff, very many of whom have done an outstanding job for us and need to be properly incentivised to keep doing that, and so it's making sure that that balance is responsibly taken,' said RBS group chief executive Steven Hester.

Bonuses were good at Maybank whose financial year-end is June. A Maybank spokeswoman said that bonuses for the financial year ended June 2008 was better than a year ago.

Among local banks, United Overseas Bank said that it would pay bonuses, taking into account the full year's performance. 'These are typically paid at the end of March the following year after the accounts are finalised.'

OCBC Bank spokeswoman Koh Ching Ching said that the bank would 'take into consideration the current economic conditions, the bank's overall performance and the individual employee's performance in our decision for bonus payout'.

DBS Group Holdings last month said that top managers and other staff would take home less pay this year due to lower bonuses, but their basic pay has not been cut.