As global banks in Asia continue to cut senior staff and restrict recruitment, headhunters say bankers are increasingly gravitating to IBs with the best recent revenue records – and the most stable jobs.
Which firms are now dominating Asian investment banking? And should you work for them? Experts give their views on the first-half Dealogic league tables (for ex-Japan Asia) in M&A, ECM and DCM.
M&A is the sector where global banks have retained their edge over their Chinese counterparts in Asia. A regulatory clampdown on overseas Chinese acquisitions has also made it hard for mainland banks to gain ground. “Western banks dominate the league tables, given their well-established foothold in cross-border M&A and ability to use their powerful global network of clients,” says Hugo Cheng, a consultant at Hong Kong financial services consultancy Quinlan & Associates.
Three American institutions – Morgan Stanley, Citi and J.P. Morgan – appear in top-five banks for Asian M&A revenue in the first half. “Global banks remain popular destinations for bankers in Asia, particularly the US houses, who dealt with many of the pain points from the financial crisis earlier than their European rivals,” says Cheng.
Top-ranked Morgan Stanley, Credit Suisse and Citi have been generating M&A revenue predominantly from Greater China due to their “strong China origination bankers and industry experts, especially in telecoms media and technology”, says Stanley Soh, a Hong Kong-based regional country director of financial services solutions in Asia..
“They’re good at sourcing global targets or buyers on behalf of China clients. Credit Suisse is strong across Southeast Asia too, and pays its bankers very generously,” says Soh. “Junior bankers in these three firms can work on healthy pipelines and high-profile deals. Their M&A bankers can expect high bonuses this year if they're involved in closed deals.”
Mainland banks have cornered the ECM market in Asia, particularly as more companies from their home country use Hong Kong’s exchange to go public. While some Western corporates have listed in Hong Kong in the past – Samsonite in 2011, for example – few do so now. Chinese banks have also landed IPOs by offering fees as low as 1%, well below the rates of their global rivals.
“About 85% of Asia ex-Japan ECM revenue comes from China, due to the large number of IPOs from Chinese firms. The Chinese banks also have stronger onshore relationships with mainland corporates and they price more aggressively,” says Cheng.
“Chinese banks like GF Securities, CITIC Securities and Haitong Securities have excellent distribution and corporate banking networks, resulting in robust pipelines. Junior bankers are joining these firms to enhance their execution skills and enjoy generous bonuses,” says Soh.
“The traditional Asian debt houses such as HSBC and Citi continue to appear at the top of the league tables. However, because of the development of the Chinese market, Chinese firms are also posting strong results, leveraging their balance-sheet relationships to drive DCM deal flow,” says Cheng from Quinlan & Associates.
Mainland banks are taking advantage of debt-fuelled acquisitions by Chinese companies and the increased use of bonds issued in the RMB currency.
“The Chinese firms are pushing their way up the rankings, which is opening up alternative career opportunities. The narrowing pay gap between mainland and international players is also luring bankers to some of the more prominent Chinese institutions,” says Cheng. “But distinct differences in culture mean it can take some time for bankers to make an effective career transition.”
Junior DCM execution teams at Chinese Banks are now being bulked up “mainly to cope with an extremely high workload”, adds Ed Goh, principal consultant in sales and trading at recruiters Selby Jennings in Hong Kong.
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