The recent departure of high-profile executives from state-owned CITIC Securities has exposed some of the potential dangers of reaching a senior position at a Chinese bank in Hong Kong as Beijing looks to take more control over its large conglomerates. Lower down the ranks, however, firms like CITIC, CICC and BOCI are emerging as viable options for junior bankers in Hong Kong who want to build large mainland client networks at the start of their careers.
Yesterday, Jonathan Slone resigned from his role as chief executive of CLSA, the Hong Kong broker that CITIC acquired in 2012. His departure comes just two weeks after that of CLSA chairman Tang Zhenyi. Nigel Beattie, CLSA’s COO, is also reportedly leaving.
Their exits have wider significant for senior Hong Kong-based managers at Chinese banks. CLSA is seen as the freewheeling Hong Kong offshoot of the more conservative CITIC. CLSA’s parent has legitimate concerns about the unit’s performance after its attempts to expand in M&A, ECM and prime brokerage have faltered. But the executive departures serve as a reminder that Western-style management doesn’t always gel well with Chinese bureaucracy.
Slone, for example, led CLSA under its previous owner, France's Crédit Agricole, and famously called his firm “an insane asylum” because of its nonconformist research ideas. Now CLSA’s ability to offer independent research has been called into question by Bloomberg because its ultimate owner is the Chinese government.
Senior jobs at Chinese banks in Hong Kong have been slowly becoming more attractive over the past few years, particularly as Western banks have cut senior roles, leaving managing directors with fewer options if they want to stay within the sell-side. While Chinese banks are still keen to scoop up MDs who’ve been cut from US and European players, growing concern about the CITIC exits makes it less likely that their job offers will be taken up, says a Hong Kong-based headhunter.
“Candidates have always had issues about moving to a Chinese bank for the first time – mainly around base pay and office culture. But the CITIC news raises new concerns that, if they are in a leadership position, they will be too constrained by head office,” says the headhunter, speaking off the record.
They may ultimately also be reined in by Beijing. The Financial Times reports that the Chinese government is tightening its control of state-owned enterprises, including powerful ones such as CITIC. An increasing number of executives are leaving these organisations because of onerous HR policies, such as restrictions on personal movement. Tang, who was not accused of wrongdoing, cannot reportedly leave China until after an internal audit is completed, according to the FT.
The crackdown on CLSA isn’t likely to make graduates and junior bankers less enthusiastic about working for Chinese banks in Hong Kong, says the headhunter. An analyst at BOCI says he joined a Chinese bank because it’s a much quicker way of building up the network of Chinese clients that he needs to establish his investment banking career. “I’ve been given client-facing responsibility early on and I’m out with Chinese clients most nights,” he says. “My friends at US banks in HK haven’t got the same kind of connections as I have, so I can always move to a foreign bank in the future. A Chinese bank is a stepping stone.”
He may want to move before he gets too senior, however. Despite its attempts to become the ‘Goldman Sachs of China’, senior base pay at CITIC is reportedly poor. Bonus cuts were also reportedly a factor behind Slone’s decision to leave.
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