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How investment banking careers are changing in Asia

Shanghai

Global investment banks in China are trying to recruit a “new breed” of bankers as they focus on domestic clients with international ambitions.

Brian Gu, co-head of China investment banking at JPMorgan, says the “old model” for doing business in China is changing. “The new breed of bankers has to learn different product and industry skills,” he told Finance Asia.

What does this mean for investment banking careers in China? Well, JPMorgan and other global banks in China are increasingly trying to hire bankers who can assist the global expansion of private Chinese companies as they struggle to win deals from state-owned enterprises (SOE), who prefer to use domestic banks. Recent regulatory investigations into foreign banks winning mandates by recruiting children of powerful Chinese officials have also dented their appetite for SOE clients.

“We believed that privately-owned enterprises and Chinese multi-nationals are becoming bankers’ key targets,” says Kin Fu, managing partner of Falcon Talent in Beijing.

Global banks in China are now demanding “real banking skills and experience” instead of political connections, says Jason Tan, a partner at search firm Being & Associates. “Chinese conglomerates are going on an international shopping spree, buying landmark real estate, brands and more. To help these new clients, banks like JPM must employ Chinese bankers who know New York and London – developed countries and their prime assets,” he adds.

Boosted by the Alibaba IPO, China-related revenues across investment banking stand at $4.2bn so far this year, up 80% from the same period in 2013, according to data provide Dealogic. While Western investment banks like to pitch themselves to Chinese clients as “total solution” providers – offering ECM, DCM and M&A expertise – headhunters say M&A skills are most in demand right now. “We expect more M&A deals in the coming years, so the job market needs i-bankers with M&A experience at present,” explains Fu.

Experts in outbound M&A are banks’ prime targets. “Chinese privately owned companies are growing and demanding more sophisticated services – from more sector-focused expertise to more complex M&A and financing solutions,” says Rafael Brana, a consultant at search firm Bo Le Associates in Hong Kong. “Cross-border transactions are by nature more complex and require global cooperation. These bankers must be comfortable in international deal teams, able to help Chinese clients bridge markets successfully,” he adds.

But in an emerging market suffering from skill shortages across the banking sector, how do foreign banks in China plan to source their new breed of bankers? They have little option but to take a long-term approach as there aren’t enough senior rainmakers around to poach. “More and more this year I’m seeing banks send some of their top Chinese analysts and associates to their US or London offices for extended secondments,” says Brana. “This helps banks cover Chinese cross-border transactions by having Chinese staff globally located to coordinate multi-country teams for Chinese clients looking for M&A opportunities in North American, South American, African or European countries.”

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