Account closed: who has left banking?

Demoralised investment bankers are quitting the industry in droves and making the leap into the corporate sector, particularly the booming fintech space.

For many, the sheen has come off their banking careers since the 2008 global financial crisis knocked public confidence and led to regulatory pressure that shrank executive pay and bonuses.

Most recently, 2018 has seen some Chinese fintech start-ups lure senior China focused bankers, including JP Morgan's Brian Gu and Bocom International's Esther Wong, as well as former Commonwealth Bank of Australia CFO Rob Jesudason. Such companies are tapping executives with global experience who may be tempted by the promising financial upside of joining a start-up as well as the opportunity to create a business.

“The talent debacle at banks is happening because the two main motives for joining a bank, compensation and prestige, took a knock post GFC,” said Benjamin Quinlan, CEO and managing partner of strategy consultancy Quinlan & Associates, “Investment bankers have become known as banksters.”

Shrinking budgets have meant fewer bankers are promoted to the highly prized rank of managing director. This has created a bottleneck hindering younger, talented staff looking for career progression and rising levels of frustration within teams.

The number of people leaving European banks voluntarily has spiked to 20% among vice presidents for some businesses, well above the average turnover of 10%, according to Quinlan & Associates' research.

There is still much that banks can do to improve engagement and they should focus on team dynamics said Quinlan who has penned a report on the subject which is due out in the coming weeks.

With banks in Asia slow to hire and, in some cases, looking to shed jobs, the movement is unlikely to slow down.

From 2011 to 2015, the number of employees at 15 of the world’s largest banks fell by 12% from 2.17 million to 1.91 million, according to company reports and Quinlan & Associates' research. Adding considerably to the pressure, Deutsche Bank said in October last year that it would shed 9,000 full-time employees and 6,000 contractor positions.

FinanceAsia will track the latest moves on this page.

2018

2017

2016

2015

Liping Zhang Credit Suisse ➡ Blackstone	Steve Lim JP Morgan ➡ CVC	Winston Cheng BofA ML ➡ LeTV
Hsin Yue Yong Goldman Sachs ➡ Wilmar International	Loh Boon Chye BofA ML ➡ SGX	Ronnie Behar Credit Suisse ➡ Affinity
Azhar Zabidi BofA ML ➡ Capital Markets Promotion Council of Malaysia	Henry Cai Deutsche ➡ AGIC

2014

Matthew Bosrock HSBC ➡ S&P	Rob Hamilton First NZ Capital ➡ Skycity Entertainment	Robert Rankin: Deutsche Bank ➡  Consolidated Press
Jun Ma Deutsche Bank ➡  PBoC	Lee Seung-june Goldman Sachs ➡ TPG

2013

Wu Yibing Citic Group ➡ Temasek

Charon Wardini Mokhzani CIMB ➡ Khazanah Nasional

Guy Wylie RBS ➡ Telstra

2012 and earlier

Mark Machin Goldman Sachs ➡ Canada Pension Plan

Jin-Yong Cai  Goldman Sachs ➡ IFC ➡ TPG

Yusuf Alireza Goldman Sachs ➡ Noble Group

A closer look at the trend

Investment bankers were very well compensated but market volatility, redundancy risk and shrinking packages have prompted an increasing number to leave the industry.

For some, departure from banking may be a pre-emptive move, as a number of banks have slashed headcount in IB. The cuts in Asia are taking place across divisions, from banking advisory to equities trading business, and while IB has not been targeted in all redundancy exercises, the writing is clearly on the wall.

“We are seeing a clear trend of bankers leaving to join both corporates and private equity firms as overall pay scales in banking have declined and the risk of redundancy has risen,” said Jay Abeyasinghe, manager of banking and financial services at recruitment agency Morgan McKinley.

Top investment bankers are no longer paid as much as they were prior to the global financial crisis in 2008. Pay rises and bonuses are under intense scrutiny.

John Mullally, director of financial services at Robert Walters Hong Kong, said junior bankers are increasingly turning away from investment banking as a career because of lower starting salaries and long working hours. They believe it's easier to make a career change while they are still young.

At Harvard Business School, the number of MBA graduates choosing a career in investment banking fell by 52% from 2011 to 2015. Similar trends are being observed at other leading business schools in the US, Europe and Asia, with graduates increasingly turning to careers in technology companies such as Facebook, Amazon and Google, according to research by Quinlan & Associates.

MBA graduate employment destinations 2011 vs 2015: Quinlan & Associates

Senior and more experienced bankers will find it harder to leave the sector because they have spent years developing deep industry knowledge and business contacts. Still, many have chosen to do so, with work-life balance becoming increasingly important.

“Many senior bankers have earned much during their banking career and they will start thinking about taking life easier,” Robert Walters’ Mullally said. “It is almost certain they will have to accept a pay cut for moving to corporates, but in return they can move away from the long hours of work.”

While salaries and compensation packages are usually closely guarded, it is common practice for senior executives to structure their pay to include stock, especially in the event they're joining a fintech or e-commerce start-up, anticipating a capital market event.

Not everyone is looking to exit banking, despite some murmurs of dissatisfaction with remuneration and bonuses among Asia-based bankers. There have even been several high profile cases of bankers returning to the sector after stints in other industries.

Robert Walters’ Mullally said such rebounds are however becoming increasingly unlikely given that the skill set of investment bankers differs considerably from the skills required by public companies.