We have both good and bad news to impart about front-office jobs at investment banks in Hong Kong this bonus season.
Recruitment levels will be up on this time last year. “There will be more movement across investment banking this bonus season compared with 2013, when most hiring was pushed into the second half,” says the front-office Asia recruitment head of a major global bank.
Agency recruiters in Hong Kong are also optimistic about the employment outlook, but they continue to use that ominous word: “selective”. Translation: investment banks are happy to hire top-performers, but won’t be adding massively to their headcounts.
"The key strategies for most banks are to improve their return on equity and cut cost in this new year. Hence, there are hiring only for key revenue-generating divisions as well as replacements after the bonus period," says Stanley Soh, regional director of financial services in Asia at search firm Global Sage.
Here are eight factors that will help shape the job market in Hong Kong IBD in the Year of the Horse:
Welcome to the year of the 360-degree banker. “Historically, sector teams at investment banks in Asia have been very content-focused, leaving the country teams to be mainly client-facing,” says Christian Brun, a partner at search firm Wellesley Partners. “But this year, senior sector bankers who have a great content knowledge of their coverage industry, but don’t have the client connections, won’t be in such high demand. Equally, country teams are being ‘contentised’ – they must have the ability to execute. It’s all about bankers who can be fully accountable for generating revenue.”
Recruiters agree that redundancy numbers at Hong Kong investment banks won’t be as large as last year. “Trimming was happening over Christmas and is still taking place. But it’s largely the 'standard' cutting of underperformers; it’s not on a big scale,” says Brun. Soh from Global Sage adds: "Certain divisions like fixed income continue to struggle and there is a tendency to replace expensive seasoned bankers with less experienced junior ones. However, there is unlikely to be massive layoffs or restructuring plans, only retrenchment on a rolling basis."
China’s recent reintroduction of initial public offerings has got off to a rocky start. Nevertheless, recruiters are adamant that it will make global banks in Hong Kong and China expand the ECM teams that they trimmed back in 2012 and 2013. “Because the IPO market will become more active this year, we should see more hiring in corporate finance. ECM experience will be important to banks this year,” says Marlene Chan, a senior consultant at headhunters Capital People.
The VP talent pool in Hong Kong is “barren”, says Sarah Harte-Spencer, director of global markets at headhunters Sheffield Haworth. A lack of junior-level hiring since the financial crisis has now left banks without enough associates to promote into their VP ranks. “This year we are seeing early demand for VPs to fill roles where banks have key-man risk or because they are pushing out underperformers. But banks are going to pay a premium for top revenue generators – even though this may be more difficult to get approved. Without getting a premium, VPs will not leave unless they are very unhappy.”
Mandarin speakers in the territory are advised to send their CVs to the likes of Agricultural Bank of China, Bank of China, Bank of Communications, China Merchants Bank, and Industrial and Commercial Bank of China. “It’s a big trend that inbound investment into China is being replaced in importance by outbound cross-border investment by mainland Chinese firms overseas. Hong Kong is obviously a key destination for this investment and Chinese banks in Hong Kong are expanding on the back of this,” says Rafael Brana, a consultant at search firm Bo Le.
There are few exceptions to the must-know-Mandarin recruitment rule within Hong Kong investment banking – but natural resources may be a sector where bankers can speak English and still get by. HSBC is among the banks beefing up its resources ranks with expats. “Globe-trotting bankers are getting hired in HK in resources,” says Brana. “Chinese companies are buying resources overseas, in particular in Australia, so their bankers need to be people who can speak English and have international experience.”
UBS finished 2013 on top of the Dealogic league table for investment banking fees in ex-Japan Asia. “UBS is hiring and is in growth mode in Asia – Goldman Sachs also enjoyed a very good year,” says a Hong Kong headhunter with knowledge of the Swiss bank. Meanwhile, HSBC was the top fee-earner within the Hong Kong market. “It’s finally generating good IBD revenue from its broad client base in HK,” he adds.
Fancy swapping the high-pay/low-job security world of investment banking for a stable but less lucrative in-house M&A or strategy role in the corporate sector? You could get your chance in the Year of the Horse – acquisition-hungry Hong Kong and mainland companies, such as consumer goods giant Li & Fung, are on the hunt for bankers to guide them through mergers in 2014, says the headhunter.