Financial institutions are seeking to tap into the growing market of high-net-worth individuals Local frontline private bankers have seen a rise in their salaries due to a shortage of talent as banks move in on a potentially lucrative spring of untapped wealthy customers in Hong Kong, according to consultants and headhunters. The trend is in contrast to investment banks that are slashing staff as deals dry up and retail banks freezing pay to compensate for increasing consumer bad-debt write-offs. A recent PricewaterhouseCoopers (PwC) survey of 13 private banks operating in Hong Kong found that more than 75 per cent of lenders' recruitment needs would be met by poaching staff from competitors, compared with 65 per cent in Singapore and only 22 per cent in Australia. 'The situation in the private-banking sector is a real anomaly,' said Alfred Chown, principal for headhunter EL Consult. 'There is a lot of poaching going on, as the private banks that want to gain market share are trying to steal people away from their opposition.' According to fellow headhunter Michael Page International's head of banking division Andrew Oliver, the cherry-picking of top performers focuses on the relationship managers, who help manage a client's wealth. Aggressive banks are seeking to lure high-flyers with what is termed 'sticky assets' - essentially the wealth of clients who are expected to continue their banking relationship with an individual banker who decides to work for a rival financial institution. 'If the banker has sticky assets in excess of US$100 million to $200 million then they would be paid a premium. Those with more than $500 million would probably command a very large premium,' Mr Oliver said. Premiums come in the form of bigger commissions from private-banking products and services sold to wealthy customers. Mr Chown said: 'They are giving them a bigger chunk of the pie. Generally in private banking, the salary is not what it is all about, it's about the commission that they bring in from the clients that they are able to win.' The shortage in relationship officers is occurring as more private banks expand in the fast-growing Hong Kong - and Asian - market. The PwC survey said private banks in Hong Kong expected managed assets to grow 11 per cent per year to 2005, while revenues were expected to rise 6 per cent each year in the same period. But similar PwC studies estimated the assets under management by European and North American private banks would grow only 3 and 8 per cent respectively for this year. However, the relationship officers' pay boost has put pressure on profit margins. 'The very senior relationship [managers] are being paid quite highly. They have their steady customers, they are a prime target to be poached ... that is where the cost pressure is the highest,' PwC financial services practice senior manager Stephanie Goulston said. PwC partner Mervyn Jacob said: 'I think private bankers will really have to increase the productivity, and the number of clients, of relationship officers.'