Brain drain at London banks

LONDON investment banks are facing an unprecedented brain drain of talented executives to Asia, according to a leading financial executive search firm.

Sheffield Haworth, which has 350,000 executive candidates on its books, has reported an acceleration in the rate at which top bankers are emigrating east. Chief executive Tim Sheffield told City A.M.: “The Asia-Pacific market offers high growth, low taxes and significant career upsides. And there’s less political pressure on pay from outside the industry.”

The data shows the West’s financial centres becoming “net exporters” of talent: of 516 executives surveyed who moved to Asia in 2010, 31 per cent came from New York and London, versus just eight per cent in 2009.

And the eastwards migration is exacerbating a severe skills gap in London. One senior banker in London told City A.M. that investment banks here now struggle to find enough top-notch candidates domestically.

Sheffield warns that “onerous tax regimes and high tax regimes are compounding this effect”. The EU, in particular, now has the most stringent pay rules in the world.

Last year alone saw dozens of division heads leave for Asia. UBS’s Matthew Koder left London for Bank of America-Merrill Lynch in Hong Kong, Goldman transferred financial institutions MD Peter Enns from New York to Hong Kong and BarCap moved senior banker Marco Schwartz from London to Hong Kong.

Ken Brotherston, chief executive of search firm Kinsey Allen, says he has seen a similar trend: “You start doing the maths between what you get taxed in the UK and in Hong Kong and suddenly those numbers start to make quite an appealing argument.”