The Hong Kong offices of several international banks – in particular RBS, ANZ, DBS and Citi – are competing to relocate mainland-based private bankers who will give them rich Chinese clients.
Put simply: HK banks want more money from PRC customers; mainland private bankers want better compensation; and wealthy Chinese individuals want to invest in the laissez-faire Hong Kong financial markets.
It’s a potentially lucrative win for all three parties, which explains why banks have become, in the words of one headhunter I spoke to, “very aggressive” in targeting relationship managers (RMs) from China.
So why not just hire in HK? The recruiter puts it rather bluntly: “Hong Kong bankers can’t handle Chinese clients – there’s a cultural misfit.”
What’s in it for the bankers? More money.
RMs who have assets under management of about 30m yuan (US$4.47m) per client can almost triple their base salaries if they move from Shanghai or Beijing to Hong Kong.
Take the recent case of a Beijing private banker with seven years’ experience and 300m yuan (US$44.74m) of total AUM. In China, his base pay was 15k yuan (US$2.2k) a month, but his salary soared to HK$43k (US$5.5k) when he shifted to Hong Kong.
He also received a housing allowance and, more importantly, the opportunity to earn greater commissions to boost his total compensation.
Chinese private bankers employed by HK banks typically spend half their time in Hong Kong and the other half meeting clients in mainland China, where face-to-face contact is vital to building business.
Other than the money, the beauty of this travelling-RM arrangement is that you gain experience in a major global banking centre, dealing with complex financial products, but you don’t lose touch with your China network. You therefore retain the option of moving your career back to China, when the private banking market there is more developed.
And finally, what is motivating an increasing number of rich mainland Chinese to want their private bankers based in Hong Kong? There are two principle reasons.
Firstly, it enables them to invest in higher return/higher risk banking products which are not available in China. “For them, it’s like moving from a corner shop to a mega supermarket,” says the headhunter.
Secondly, it is much easier to make international transfers from Hong Kong than it is from China. For high-net-worth Chinese, an HK-based bank can be their gateway to the world.
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