Bonus pools in private banking this year will be sharply lower than last, notably in Switzerland, a report by the global recruitment firm TMP Worldwide said.
There would be widespread differences in pay between geographical regions, added the report on 2001 compensation, which was drawn largely from discussions with HR executives at leading firms.
In the US, average total pay in private banking was likely to be down by 20%-30%, with some senior executives taking cuts of up to 50%, said the report. But some firms would enjoy an 'up' year due to their success in attracting new clients.
Discretionary bonuses were likely to be closely tied to dollars earned in fees rather than commissions. But without a market rebound, consolidation and redundancies pointed to a soft job market, with little trace of the job mobility, sign-on bonuses and multi-year guarantees of the past.
In the UK, bonuses were expected to fall by 20%-50%, and at all the firms this was expected to wipe out the average 10% rise in base compensation the region saw for private bankers last year.
Adam Green, a TMP partner in London, said banks appeared keen to use the economic downturn as an opportunity to reward top performers, some of whom may even match the previous year in earnings, while sending sobering signals to those who were not pulling their weight.
In a slow climate for job moves, equity in the form of options and restricted stock would play a much increased role in UK private banking compensation this year, said Green.
Compliance officials would be in demand as new regulatory guidelines from the Financial Services Authority came into effect, as would fiduciary professionals. Wealth protection remained a core objective in volatile markets.
In Switzerland, private bankers at the big universal banks were facing a 50% cut in their pay incentives from last year, with many traditional Swiss private banks cutting bonuses even more, said TMP.
Private clients were less likely to follow relationship managers out the door as they changed firms, and this had reduced team moves and up-front guarantees.
Swiss cantonal banks that were interested in private bankers were now expected to buy rather than build a business, with outright purchases of money management firms.
In Asia, private banking compensation was expected to stay flat for the foreseeable future, and the mature state of the market was likely to rein in the extraordinary job mobility of recent years.
Many Private Client Service (PCS) brokers were now contemplating moving to private banking units as the Asian affluent looked to strategies for wealth protection, rather than growth.
Despite the problems of the private banking sector globally, the sheer bulk of high net-worth assets and the large contribution they made to the bottom line at many organisations should not be underestimated, according to TMP's global head of private banking in New York, Gerry Cameron.
He pointed out that Citigroup's private banking earnings for the first three-quarters of the year grew 19% year-on-year.