Despite the gloomy global outlook caused by the sub-prime crisis, Singapore's financial sector is still a very viable career option.
A quick snapshot
In a short span of 30 years, Singapore has grown into a thriving financial centre that serves not only its domestic economy but also the Asia Pacific region and the wider world. Today, Singapore is highly regarded by key financial institutions and industry players as an ideal base to penetrate markets from.
But how should someone looking for a career opportunity in the finance sector react in light of the sub-prime crisis impact on the global landscape? Especially when 34,000 jobs (and more expected) have been lost in the United States alone as a result of this debacle? Nobel laureate Joseph Stiglitz has indicated that the worse is yet to come for the global economy.
Thankfully, Singapore is not bearing the brunt of the crisis, nor will it allow itself to.
For starters, Singapore's diversification policies in investment mean a reduction of collateral damage caused by the crisis. Minister of State for Trade and Industry Mr S Iswaran has indicated only 25 per cent of Singapore's collateral debt obligations were exposed to the American sub-prime mortgages. Furthermore, the Government of Singapore Investment Corporation (GIC) and Temasek Holdings have pumped in large amounts of funds to revitalize Citigroup and Merrill Lynch, in an effort to kick-start the fallen giants.
The government is not alone in being optimistic about Singapore's future. Singapore is still seen as a prime location for wealth and fund managements by investors worldwide. The financial sector has been consistently growing over the past few years, enjoying a 16.9% growth in 2007. Assets managed by fund managers in Singapore grew by 24% in 2006 to hit S$891 billion, with total assets of financial institutions in Singapore standing at S$1.7 trillion as of 2007.
And the market is expected to continue growing despite the recent economic turmoil. There are now over 600 multinational financial institutions which contribute to more than 12% of the Gross Domestic Product (GDP) in 2007. All of which require capable and driven individuals to join them, from fund managers, operations officers to investment bankers.
Never enough talent
What does all this mean to you, a possible fresh graduate or a mid-career finance professional working in another financial centre elsewhere in the world?
To put it simply, many financial institutions in Singapore are experiencing a shortage of suitably skilled talents to support their rapid growth. Local tertiary institutions churn out cohorts of graduates each year, but the industry still turns regularly to foreign-trained talent to make up for the shortfall.
The Singapore government accommodates these realities by adopting an open door policy to international talent and expertise, making Singapore the second most competitive economy in the world, after the US, in terms of attractiveness to highly skilled global talent.
Young, highly-educated, and very ambitious, many of these talented individuals flock towards the private or investment banking sectors of the local financial industry. That is hardly surprising, given that these are arguably the most lucrative segments of Singapore's banking sector.
Private banking is mainly about relationship management for very High Net Worth Individuals (HNWI), that is, people with at least US$1 million of liquid assets, excluding the value of their primary residence. The private banking sector is expected to grow at 9 per cent over the next five years. According to Mr David Noble, Oliver Wyman's head of financial services in the Asia-Pacific, Asia's wealth is expected to grow by US$4 trillion over the next five years to reach US$13 trillion by 2012.
In other words, it is a huge and growing market which global banks are keen to tap on. Major banks with private banking operations in Singapore are UBS, Merrill Lynch, Credit Suisse, Citigroup Private Bank and HSBC Private Bank.
Societe Generale, a French lending company, has taken advantage of the explosive growth in the Asian financial sector by setting up a branch office in Singapore in late 2007. Mr Pierre-F. Baer, CEO of Societe Generale, is of the opinion that even more manpower is needed in the finance sector in Singapore now. In a statement to the local media in 2007, Mr Baer said, “Definitely there are not enough bankers to take care of all the clients' needs today. We're hiring more people right now."
With an increase in the number of hedge funds set up in Singapore, there is an even bigger demand for talented individuals to join the industry. This has led to the increasing popularity of the Chartered Alternative Investment Analyst (CAIA) course.
The CAIA offers an alternative to the popular Chartered Financial Analyst (CFA) course, which is considered by many as a key stepping stone into the finance industry. Introduced just eight years ago, the CAIA provides training for those who are keen to join the fast growing sector of alternative investment banking, or for those who want to make a switch from other financial services.
Although just 42 people in Singapore have the CAIA qualification, it is expected that demand for the course will heat up, given the healthy forecast of growth for the Asian finance sector. CAIA holders will be sought after by big investment banks which require alternative specialists such as point brokers, traders and sales personnel. Essentially, private bankers will need to have a clear understanding of the products that they are selling to clients in order to succeed in the dynamic industry.
A typical work day of an investment banker involves morning briefs, conference calls, reviewing documents and consecutive meetings that could stretch from afternoons to late nights due to the inclusion of players from foreign markets.
Investment bankers focus on winning a mandate and negotiating for the best terms of a contract. This can involve collaterised bonds obligation, real estate investment trusts, debt defeasance, buy-back lease, medium term note programmes, structured notes, and so on, to help clients raise funds in the most cost-effective manner.
Not everyone is born a Warren Buffet, but aspiring investment bankers should possess finely-tuned instincts that can allow them to capitalise on market changes to reap the most benefits for their clients. It is a highly demanding and stressful job. An investment banker needs to come up with constant innovation, to structure a proposal that meets a client's exacting demands, while staying within the legal & regulatory framework. In other words, they need to be sharp, resourceful and responsive to emerging trends.
An Innovative Degree
If you are technologically and operationally inclined but still want to make your mark on the finance sector, you may want to consider the new master's degree programme offered by the Singapore Management University (SMU).
The Master of IT in Business (MITB) programme is the first postgraduate degree to focus on grooming future leaders in the finance marketplace. It was launched by the School of Information Systems (SIS) in 2007, in an effort to raise more leaders for the booming financial industry.
In a statement from the school, the importance of training leaders in the technology and operations sector was explained: "Banks and financial services, more than any other sector of the economy, invest generous resources and money in IT. A significant number of local, regional and international banks and financial institutions have also located major technology and operations resources in Singapore, fuelling a demand for a talent pool of trained IT professionals who are able to relate technology to business."
Whatever your ambitions are, bear in mind that the banking and finance industry is a fast-moving sector with often cut-throat competition. It is not usually a long-term career for most professionals, as many inevitably burn out along the way. It takes those with exceptional drive and energy to stay the course, and to reap the eventual rewards.