SG Private Banking has been hiring in Hong Kong on the back of increased investor appetite for structured products – could it be that the derivatives banker is in demand once again?

Alex Fung Wai-kai, chief executive of SG Private Banking for Hong Kong and North Asia, recently told Hong Kong’s Standard newspaper that appetite for structured products has returned as rich clients seek to diversify their wealth, although they usually now opt for less complex items, linked to only one underlying asset.

The French firm has been recruiting to cope with the revived demand for securities, according to Fung.

There are early signs that other private banks are starting to do the same, but only because they savaged their structured products teams when client confidence collapsed at the beginning of the financial crisis, so they are now slowly rebuilding from a low base.

“Banks which have significantly downsized such desks are now looking to beef up staff strength,” says Gary Lai, manager, financial services, Robert Walters.

John Koh, managing director of search firm WMRC, thinks the increase in demand for structured products is not yet large enough to make a significant impact on the employment market.

“No doubt interest has been picking up for structured products among wealthy clients, but the adoption is nowhere near to what we saw previously during the bull run,” says Koh.

And in the post-Lehman world, the way private bankers sell (and are rewarded for selling) complex derivatives has fundamentally changed.

“There is definitely now a strong emphasis on accountability as banks are increasing moving towards a fixed remuneration structure rather than a variable one. This is to discourage short-term, opportunistic sales behaviour and to reward bankers who are ethical and responsible in selling those products,” says Koh.

Bankers are now incentivised to think long term and to be well grounded in their product knowledge, he adds.

Lai agrees: “Most bankers are, at least for now, focusing on account management and client satisfaction, rather than on sales revenues."