Employees in Citi’s Asian equities unit have generally taken home better bonuses than their counterparts at other US banks in Hong Kong. Citi’s 2017 Asian equities bonus pool increased by a “low double-digit” percentage compared with 2016, says a Hong Kong-based source close to the bank.
“When bonuses hit at Citi in Hong Kong, the equities guys initially weren’t that happy because they expected more after having a strong year,” he adds. “But then they realised that their peers at other American banks hadn’t done well bonus-wise, so the mood improved pretty quickly.”
At Goldman Sachs, J.P. Morgan, Merrill Lynch and Morgan Stanley, bonuses in Asian equities were “down or flat” on the previous year, he says. A banking recruiter we spoke with agreed, describing their bonuses as “mediocre”. The equities market in the region stabilised in 2017, with preliminary data from Coalition showing banks made revenues of $9.5bn, the same figure as 2016.
“A handful of very senior people got good bonuses at these four US banks, as did some of the Mandarin-speaking juniors that they all want to retain. But it wasn’t so good for most of the people in the middle ranks,” says the source.
By contrast, he says Citi enjoyed a strong 2017 after reaping the rewards of some “judicious” Hong Kong-based senior hires in 2015 and 2016, a period in which other banks – most notably Standard Chartered and Barclays – were culling their Asian equities teams.
In April 2016, Citi moved its co-head of equities for Australia, Angus Richardson, to Hong Kong as head of APAC cash equities sales. Shortly after, Paul Marchington, the former head of EMEA synthetic equity sales at UBS, joined as APAC head of investor services sales. Last year, Credit Suisse MD Arnaud Leteissier was named as Citi’s head of APAC equity derivatives trading and co-head of APAC equity derivatives.
“Citi was able to take on these people and several others during a downturn in the job market when not many competitors were hiring in Asian equities. That strategy is now paying off,” says the source.
After European banks pay their bonuses in the coming weeks, he expects Asian equities compensation (base salaries and bonuses) to fall by about 7% for 2017. “We’ve seen that bonuses at American firms are flat to down, but for the rest – with the exception of HSBC – it will be even worse.”
Credit Suisse, for example, cut scores of people from its Asian equities unit in the first half of last year. Lower equity sales and trading income helped cause revenue in its APAC markets division to decrease 22% year on year in the third quarter. “CS lost a lot of senior people, so it’s no surprise that the business has taken a massive hit – there’s only so far you can cut.”
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