In theory, Hong Kong is the promised land. Blighted only by air quality, it has the advantages both of proximity to China and a top rate of income tax of 15%. In reality, however, as Morgan Stanley and Oliver Wyman suggested in their large report this week, the Asian investment banking market is suffering from excess capacity - especially in IBD.
Unsurprisingly, therefore, investment banks in Hong Kong appear to have substantially reduced bonuses for M&A and corporate finance staff.
The chart below, from search firm BBM, shows big reductions at all levels, but especially for analysts. Last year, analysts working in corporate finance in Hong Kong received bonuses equivalent to 100% of their base salary. This year, the maximum was 40%.
There have also been redundancies (described as, "significant downscaling of investment banking staff in the region"), says BBM. Maybe a move to Hong Kong isn't such a good move after all.
Source: BBM. For more information, click here.