I've been headhunting in Hong Kong banking for about 15 years having moved here from the UK. Aside from the immediate aftermath of the financial crisis, I haven't come across a time where the big global banks were adding new headcount more slowly than they are today.
Yes, there is some hiring of Chinese coverage bankers, but much of it is to replace people who have left for the corporate sector (into business development roles at big tech firms, for example). Moreover, banks in Hong Kong have cut senior staff over the past 12 months, which is another reason why (year-on-year) front-office headcounts have fallen. As foreign banks become smaller here, Chinese firms are trying to grow. There's simply no debate: from BoC to ICBC, Chinese banks now dominate available job vacancies.
But there's a problem. Bringing the people they want on board still isn't straightforward for Chinese banks, despite having all these new vacancies on offer. While Chinese players have certainly been able to poach bankers from bulge brackets and Western boutiques in Hong Kong, they're not doing it on a regular enough basis.
This is, of course, partly because many bankers prefer the brand value and company cultures of Western banks. But it's also to do with compensation. For starters, Chinese banks don't typically offer guarantees and their base pay lags that of Western banks.
Chinese banks haven't come to terms with Hong Kong's dynamic pay environment in which new recruits can typically claim significant double-figure pay rises. This is because they're used to the more conservative mainland job market where bankers get paid within narrow lock-step salary bands. Chinese banks will adjust and become more aggressive in their pay offers, but this will take a few years.
As for annual bonuses, these are mostly paid in cash – stocks and deferments are rare, even at listed banks. This sounds like a big candidate-attracting advantage, but there's a catch. Foreign banks are actually more transparent about how bonuses are paid. You may not be entirely happy with your bonus, but at least you're told the amount and the exact 'mix' in advance on a bonus-announcement day that is set in stone in your diary.
Chinese banks won't tell you when they're announcing bonuses. And when they do 'announce' they might vaguely say 'we'll pay you in Q1'…and end up paying you in Q2. There's not much transparency and a lot of back or forth until you're actually paid.
I think all this is stifling Chinese banks' attempts to hire in Hong Kong, even as they open up more vacancies than their Western competitors. I'm not sure when Chinese banks will reform their compensation policies here, but when they do, they will become even more powerful in the job market.
Toby Jones (we have used a pseudonym to protect his identity) is a Hong Kong-based banking headhunter.
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