Bulge-bracket investment banks in Australia have stepped up hiring to rebuild their depleted teams, after audacious talent raids by boutique rivals in the past year amid record deal-making activity in the country.
Bankers and headhunters told Reuters that most major banks in Australia, including Wall Street firms, have been scrambling to add bankers since the start of the year as part of a campaign to defend their market share against new aggressive boutiques Barrenjoey Capital and Jarden.
Credit Suisse, Morgan Stanley, UBS and Australia's Macquarie Group have together hired more than 100 bankers this year, their representatives said, amid hopes that ultra-low interest rates and a recovery from the Covid-19 pandemic will ensure a strong deals pipeline.
"There's been quite a hiring spree in investment banking and the last year or 18 months has been about as good as it's been in about five or seven years," said Graeme Bricknell, Korn Ferry head of executive search in Australia and New Zealand.
"It's a significant increase [from two years ago]. Some of these places were only hiring one or two people."
Australia's deal boom and a surge in investment banking fees – to a three-year high of $1.2 billion in 2021, Refinitiv data shows – are fuelling the hiring rush among banks and start-ups aiming for a juicier share of lucrative mandates.
The country has recorded $108.7bn in M&A deals this year, a record high and more than quadruple the level of a year ago, making it the second-biggest market in the region after China.
Credit Suisse hired 52 staff in the first half of 2021, a bank spokesman said. The recruitment took place across each of its businesses in Australia, which includes equity and debt underwriting and M&A advisory, he said.
This year, we stepped it [recruitment] up a notch given the disruption at a number of a competitors
Richard Wagner,
chief executive, Morgan Stanley Australia
UBS, which was the main target of Barrenjoey's talent raid, has hired 30 staff across investment banking, equities sales and trading and research in the past six months, according to a spokesman.
Morgan Stanley has hired 20 bankers in the past year in a push to take advantage of increased competition for staff across the industry, its Australian chief executive Richard Wagner said.
"We have incrementally grown our Australian headcount every year for the past 20 years. However, this year we stepped it up a notch given the disruption at a number of a competitors," Mr Wagner told Reuters.
Macquarie has hired 14 investment bankers since January and has the largest investment banking team in Australia with more than 200 bankers,, it said in a statement to Reuters.
JPMorgan has added 10 this year, mainly in investment banking, equities and research.
Citigroup has added four to the banking and capital markets business and another four to its markets and securities division since June, their representatives said.
Barrenjoey and Jarden, after their fierce talent war against global peers, have 275 and 115 staff in Australia, respectively, spokeswomen for the banks said.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Moral education needed in a 'rapidly changing world'
Moral education lessons for young people is needed in a rapidly changing world, the head of the programme said.
Alanood Al Kaabi, head of programmes at the Education Affairs Office of the Crown Price Court - Abu Dhabi, said: "The Crown Price Court is fully behind this initiative and have already seen the curriculum succeed in empowering young people and providing them with the necessary tools to succeed in building the future of the nation at all levels.
"Moral education touches on every aspect and subject that children engage in.
"It is not just limited to science or maths but it is involved in all subjects and it is helping children to adapt to integral moral practises.
"The moral education programme has been designed to develop children holistically in a world being rapidly transformed by technology and globalisation."
