More and more Chinese 20 year-olds aspire to be investment bankers. Many of them go abroad to study and get a banking job in one of the world's major financial centres. Others stay in China, working either for the bulge bracket banks or Chinese local securities firms. How does their pay compare with their global peers?
When Western banks first came to China, they paid local rates which were far below the money on offer in New York or London. This is starting to change. The rapid rise in the cost of living in China is forcing global banks to hike pay. Nowhere is this more conspicuous than in investment banking.
"In China, global banks such as UBS, Morgan Stanley and JP Morgan are offering global salaries to their first year analysts. That is between $80k to $100k US dollars a year," says Lesley Li, founder of Shanghai-based Matrix Search, an executive search firm, adding that the annual pay rise is generally between 5% to 10%, up till the associate level.
Bulge bracket banks are not the only ones paying global rates in China. Some boutiques are doing the same. Another Shanghai-based financial headhunter, who asked not to be named, said Lazard is also offering 80k to 100k US dollars to its junior M&A analysts, and $150k to first year associates.
Local Chinese security firms aren't matching pay at the global players. One senior Chinese banker says rates of 20k to 30k RMB a month are standard for analysts at local banks. That is just between 38k to 58k US dollars a year. In some circumstances, pay can even fall as low as 10k to 20k RMB a month (roughly 20k to 38k US dollars).
Comparing to basic pay, bonuses are much more unpredictable, therefore with much less well-accepted formula. "Bonuses really depend on individual performance as well as deal flow, in general the higher up you are the higher the bonuses," suggests Rio Goh, China Country Head for the recruiter Morgan McKinley.
The anonymous senior banker pointed out that, at local firms, "on average, the bonus should be anywhere between 100k to 300k RMB for junior analysts. And associates don't get too much more, maybe just between 300k to 400k RMB."
Bonuses at local banks may be far higher for juniors who've worked on important deals. For example, China's CICC attracted attention earlier this year when it handed out bonus of as much as 48 months' base salary. However, this turned out to be only for a few who took part in massive deals. For those, a bonus of 3 or 4 million RMB this year will not be unfeasible.
Team performance alone does not dictate a bonus figure. In investment banking, it's usually the MD who brings in the client with the deal. Being the boss, MD is the one who put up the bonus pool and has the final say as how to allocate the bonus among team members. "So it also depends on how well you get on with your boss," Lesley Li of Matrix Search reminds us.
See chart. Click to enlarge.