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Morning Coffee: New financial reforms trigger new talent shortage in Asian banking

Skill shortage in China

It's hard to find talent in China

2015 looks set to be a busy one for equity capital markets (ECM) bankers in China – but recruiters fear a looming talent shortage in the sector. At the end of last month 24 firms had been cleared to launch their offerings, a high number for the Chinese market, said Vincent Chan, an analyst at Credit Suisse, in a research note. And the flow of IPOs in China is tipped to stay strong because the Securities Regulatory Commission plans to hand over the power to vet listing companies to Chinese stock exchange operators, reports the South China Morning Post.

“The relaxation of China’s IPO markets sets the stage for the long-awaited reform of its capital markets, which is critical to the success of the entire market-based system,” Alma Yang, a portfolio manager at Shenyin Wanguo Asset Management, told the newspaper.

The IPO reform is increasing pressure on banks in China to hire bankers have who both ECM experience and strong connections with mainland firms that are potentially looking to list. As we noted last year, the increased recruitment emphasis on technical banking skills in China is creating talent shortages within both ECM and M&A.

There are no quick fixes to this problem. Returnees who have gained investment banking experience in mature markets offer the perfect solution – but the candidate pool is limited and both foreign and Chinese banks are trying to attract these bankers. Hong Kong is oversupplied with ECM bankers but most will be reluctant to move to the mainland where salaries are still lower and tax rates are significantly higher. Mandarin-language requirement also rule out some Hong Kong candidates

Banks in China may also have to bulk up their compliance teams under the impending market reforms. “The regulator wants to focus more on compliance-related issues and let the investors and issuers decide on the pricing and timing of their decisions,” an equity capital markets banker told the SCMP. As the liberalisation of the Chinese finance sector gains pace, compliance professionals on the mainland are already in high demand and their employability is set to stay strong in the year of the goat.

Meanwhile:

Greater China contributed 12% of OCBC’s pretax profit in 2014, up from 6% the year before. (Bloomberg)

SGX appoints new China head and will set up branches in Shanghai and Beijing. (Business Times)

Chinese banks expand in London’s commodities sector. (Financial Times)

Hang Seng bank to sell Industrial Bank stake for $2bn (Bloomberg)

How Standard Chartered’s PR machine works. (Euromoney)

Standard Chartered appoints Lakshmi Goyal as regional head, brand and marketing for South Asia. (Campaign)

The Monetary Authority of Singapore plans reforms to over-the-counter (OTC) derivatives trading and the securities market. (Asia One)

How to set proper boundaries between work and home. (Wall Street Journal)


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