It was until recently an easy choice for bankers in Asia: if you were good enough, you got into a US or European bank, and you then stayed with global firms throughout your career.
The job market this year, particularly for bankers in Hong Kong, isn’t so straightforward. Chinese investment banks, the likes of CITIC and CICC, aren’t just rising up the league tables, they’re competing more fiercely for top graduates and paying front-office staff in Hong Kong on par with their Western rivals.
If you’re now torn between mainland and western banks, here are some new trends you need to know about.
Led by CITIC Securities, China Securities and GF Securities, Chinese firms took the top three places for Asia (ex-Japan) ECM revenues in 2017, according to Dealogic. Morgan Stanley (4th) and Credit Suisse (10th) were the only western banks in the top-10. This is partly down to the more active role mainland institutions are now playing in Hong Kong underwriting (the top-five 2017 IPO bookrunners in the city are all Chinese). “Chinese banks are winning more IPOs in Hong Kong because they already have strong relationships with the Chinese private companies that are increasingly dominating new listings here,” says Hong Kong finance professional Matt Huang, author of the book Young China Hand.
Only CICC (5th) and Haitong Securities (10th) make the top-10 banks for 2017 ex-Japan Asia M&A revenues, a table led by Morgan Stanley. “Chinese banks are losing out on cross-border M&A deals to international banks, which have better global networks and industry expertise,” says Stanley Soh, a Hong Kong-based regional country director of Asian financial services solutions. But moving to a Chinese firm might pay dividends in the future. “Chinese banks now want to build more cross-border M&A teams. CICC, CITIC and Huatai have strong domestic M&A records and are poised to develop more international expertise.”
Mainland and western banks are now fighting over the same elite talent pool: Haigui (or sea turtles), Chinese graduates returning from overseas universities. “Many of the analysts that foreign banks in Hong Kong have hired over the last decade are mainland Chinese educated in the West. They’re bilingual and can navigate easily between East and West,” says Eric Sim, a former UBS managing director who’s now a guest lecturer at Renmin University. But Chinese banks are also now a viable option for returnee grads as they hire more people to work on outbound deals.
It’s easier to move from a Western bank to a Chinese one than go the other way. “That’s why more junior bankers in Hong Kong are joining a Goldman or a J.P. Morgan first and then getting their second job at a CITIC or CICC,” says Huang. “With a global firm on your CV, a Chinese bank is more likely to offer more money and a better promotion. And bankers in Hong Kong are now more likely to accept these offers than they were a few years ago – that’s a seismic shift in the industry.”
The news that Western banks will soon be allowed control over their mainland joint ventures may be a catalyst for Chinese banks to hire a more aggressive breed of senior bankers. “The rule change means less protection for Chinese banks, which is a further incentive for them to emulate the professionalism of top-tier Western banks,” says Jason Tan, an associate director at Kelly Services. “Senior bankers at Chinese banks have traditionally been promoted and rewarded due to their loyalty instead of performance. I now expect them to be forced to take a more proactive approach and fight harder for deals.”
Goldman Sachs in Hong Kong makes you work long hours; Chinese banks make you work even longer. “Western investment banks in HK typically offer a better work-life balance,” says Francis de la Cruz, a Hong Kong-based finance professional and founder of The Write Resume and The Private Placement Group. “Chinese banks have a reputation for working people to excess. Deal flow and access to opportunities in China are typically better there, so for someone who’s looking to build a lot of experience quickly – and is willing to work long hours – joining a Chinese firm makes sense.”
As a rule of thumb, base salaries are lower at Chinese banks, but your bonus potential is higher, mainly because they don’t operate under the same restrictive bonus rules as their Western counterparts. “The earnings gap between Chinese and global banks has narrowed recently in HK and total compensation is now roughly on par,” says Huang.
A banking recruiter in Hong Kong last year surveyed 20 leading Chinese banks and securities firms and found that they all pay cash bonuses to the overwhelming majority of their staff. Sources within listed Chinese banks say only very senior managers receive any stock. “My bonus is all cash, calculated as a percentage of base salary, with no deferrals of my money,” a mid-level banker at CICC told us previously.
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