Recently approved securities joint ventures by JPMorgan and Morgan Stanley in China will make ECM and DCM recruitment even more competitive.
The China Securities Regulatory Commission is letting the banks help local clients raise money in China’s equity and debt markets. JPMorgan’s JV is with First Capital, while Morgan Stanley, having divested its stake in China International Capital Corp as a precondition, is now teaming up with China Fortune Securities.
Although the two JVs have not announced their headcount plans, recruiters expect them to carry out small-scale hiring in a talent-short market.
The firms will likely initially hire a few senior people. They will make some external hires and may transfer employees from other offices, such as Hong Kong, says Alistair Ramsbottom, managing director of Shanghai search firm The Blacklock Group. “They will likely already have in mind specific senior individuals whom they want to approach.”
Chinese regulations allow approved foreign banks to underwrite stocks and bonds, but not to trade them in the secondary market. Unsurprising, therefore, JPMorgan and Morgan Stanley will mainly be interested in recruiting ECM and DCM bankers, along with back and middle-office staff, dependent on deal flow.
Recruiters aren’t predicting a hiring spree, given the restrictions on international investment banks in China. “But the job market will still be competitive because there’s not a large number of ECM/DCM talent available,” comments Ramsbottom.
When hiring externally, the firms will prefer locally-based bankers because of their current client networks. “These are new entities and they will want people who can open doors for them, who can hit the ground running and bring in new business,” he adds.
JPMorgan and Morgan Stanley will first target local staff at other foreign investment banks, in particular UBS and Goldman Sachs, who will be familiar with the business culture of a US-Chinese joint venture, says a Shanghai headhunter who asked not to be named. But employees of domestic firms will not be ignored, especially for lower paid roles, he adds.
But will Chinese candidates want to work for the Morgans? “Some will think ‘it’s a good international name, potentially offering access to a global platform.’ Others will think ‘how quickly will they get deals signed? And how quickly will this impact their bonus?’. If you move from a domestic to a joint venture, you must believe the JV will be successful and be prepared to wait at least two or three years for it to have an impact on the market,” says Ramsbottom.
And it’s not just the required leap of faith which may prove off-putting to employees of local banks. JVs often have longer working hours and a more pressurised working environment.