Don't get too excited about Goldman Sachs' plans to take on more senior bankers in China. The new hiring, announced recently by Goldman's IBD co-head Gregg Lemkau, will be small scale and sporadic, say headhunters.
Having appointed Bill Chu in July to lead mainland investment banking, Goldman will add an undisclosed number of senior staff in China to capitalise on still "significant" economic growth, Lemkau told Reuters.
"But we're not talking more than a few senior hires and some won't even be MDs," says a Hong Kong headhunter. "GS isn't doing anything particularly dramatic. Almost every bank –MS, JPM, UBS, Citi, Nomura, HSBC, SCB – has made serious China hires this year."
"It will only be a handful of people," agrees another Hong Kong-based headhunter. "Some of this is hype – it's more about generating good PR and keeping shareholders happy. Senior managers from US banks often come to Asia and make fairly vague announcements about wanting to grow."
The new recruitment will, however, help to rebuild Goldman's Chinese ranks after it axed scores of experienced bankers across Asia, including China, this time last year.
"Goldman regularly culls underperformers, but it will also make strategic senior hires to bring in new deals and new client relationships," says Yvette Kwan, a former APAC investment banking COO at UBS, now a partner at finance consultancy Quinlan & Associates in Hong Kong.
What kind of bankers will Goldman look for during its miniature hiring drive in China?
The new recruits will primarily advise Chinese companies rather than foreign investors. "Given RMB control and new funding for One Belt One Road projects, banks' focus remains largely on helping Chinese corporates to optimise their businesses," says Jason Tan, a partner at search firm Carlson Harriet in Shanghai.
More specifically, Goldman may look to hire technology, media and telecoms (TMT) bankers in China, following Lemkau's remarks that the sector is a global priority for the bank.
"Because China tech stocks like Tencent are driving much of the recent rise in stock markets in Hong Kong and China, and because China continues to evolve towards a consumption-led economy, there are more opportunities for consumer and TMT bankers," says Kwan.
"GS is already strong in tech and is likely to supplement this with bankers who have the right relationships with Chinese start-ups," she adds. "The bank probably already knows who it's going to target for these hires."
Candidates from Chinese firms will be considered for jobs at Goldman, says Tan. "Given the inward investment policy that Beijing is currently promoting, I wouldn't be surprised if GS hires some key bankers from local investment banks."
Goldman Sachs ranks outside the top-10 firms for China investment banking revenue in the first half of 2017, according to Dealogic. UBS and Morgan Stanley are the only Western banks in the table, which is dominated by local players who offer cut-price fees to lure clients. Goldman is lobbying China to allow foreign banks full ownership of their mainland operations.
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