For most foreign financial market professionals in Hong Kong and across Asia, the days of extravagant expat life have ended — for now at least.
The standard HK$200,000 (US$25,641) per month housing allowance for top bankers is gone or going in most cases.
Paid-for chauffeurs to tote executives and their families around the steep hills of Hong Kong are scarcer, as are free memberships to exclusive country, golf or dinner clubs that may otherwise cost more than HK$2.1 million to join.
Free private school education for the kids, roughly US$10,000 per child at international schools, is being scaled back too.
Corporate ships for cruises around Hong Kong’s myriad beaches are being auctioned off.
Many banking executives from Wall Street and Europe still live a life of luxury in Asia, but for others, the expat life of perks is a fading phenomenon.
“Those kinds of packages will not be offered to the extent they were in the past,” said Paul Lucas, vice president for real estate at Pricoa Relocation.
Starting last December, Morgan Stanley, like other Wall Street banks, began rolling housing benefits into salaries.
Hong Kong’s band of elite property agents, meanwhile, are rubbing their wounds.
“My record was a HK$320,000 [rent per month] mansion ... with a full sea view,” said a property specialist surnamed Lai who’s helped expat executives find luxury homes for the past 13 years.
“Recently though, we haven’t done many deals — only those around HK$100,000 [rent per month],” Lai said.
Residential rental prices dropped, by some estimates, more than 30 percent earlier this year.
HSBC sold its junk boats several years ago but still owns bungalows throughout the region for off-sites and weekend getaways for employees.
The size of housing allowances in Hong Kong may not seem like much for people within the financial industry, but for those outside it, the numbers look staggering.
But things are changing. While the shift may not be public, its trail is evident.
In the last six months, bankers have been moving from palatial flats to more modest abodes, or relocating to less exclusive and cheaper districts.
“What we’ve seen amongst some financial institutions is that they’ve changed their benchmarks,” said Lee Quane, the Asian director of ECA International, which advises on expatriate packages and allowances.
He estimates that the average price for a three-bedroom apartment in Hong Kong in a mix of expat areas was around HK$90,000 per month last year and this year.
Lavish perks add up.
“Benefits can sometimes be up to about two times more than the base salary of the employee for Hong Kong,” Quane said.
In addition to housing and school allowances, business-class air travel and free trips home used to be a given for expats at Hong Kong financial institutions.
For some, overseas packages even included membership to fancy recreation clubs like the Aberdeen Marina Club, where memberships can cost HK$2.1 million.
The pull-back in perks is, not surprisingly, being met with some resistance. But given the extremity of the global financial crisis, a crisis fueled in large part by banks taking on too much risk, people are generally understanding of the new policies.
“They’re being backed into a corner. They don’t like it, but there’s nowhere to go, there’s no alternative,” said a US fund manager and former banker, who asked not to be named.