Investment banks in Asia are scrambling to expand in DCM, leading to high demand for senior professionals and prompting warnings that the sector is slipping into a talent shortage

Goldman Sachs recently came out fighting on the fixed-income front, with Daniel Dees, head of pan-Asia financing, telling Reuters that the firm is recruiting in Asia and is also relocating senior debt bankers from other regions.

Meanwhile, Bank of America Merrill Lynch has poached three senior pros from Deutsche Bank in Hong Kong, including Michael Luk who now heads up the firm’s Asian DCM team.

Some banks expect debt-underwriting revenue in Asia to exceed US$200m this year, helped by a predicted pick up in the Chinese local bond market and high-yield issuances. The desire to grab a share of the DCM pie is also heating up the job market.

“We are seeing stronger demand for DCM professionals now than six months ago. We expect this demand to continue throughout 2010. DCM is seen by many banks as a service they want to continue to develop, which means adding expertise and building depth,” comments Richard Fisher, partner, Principal Search.

The older, the better

Senior bankers “with strong origination experience” are most sought after, says Tze Yong Lee, manager of the front office division of Robert Walters Hong Kong.

Fisher believes the banks want: “proven performers who have the client contacts and product knowledge, and can deliver. This is certainly more the case in terms of banks which are coming from a low base. For those who have a more mature service offering, it is a case of adding depth to the bench.”

Banks can often expand their junior DCM ranks by reallocating internal resources, according to James Knott, director, fixed income and debt capital markets, Pelham. “But it is harder to effect the same at senior levels. Competition between the banks remains high and I would anticipate this driving further senior moves in the months ahead,” he says.

The supply of senior DCM talent in Asia is drying out quickly. “There is a finite number of qualified DCM bankers in the region and while demand continues to be high, as the banks compete for talent and experience, the market will increasingly feel the squeeze of a skills shortage,” says Knott.

He adds: “This is more prevalent in the high-yield space, where increased issuance is anticipated and most Asian DCM bankers have had limited deal experience, especially compared with their high-yield counterparts in Europe or the US.”