If you’re applying for graduate investment banking jobs in Hong Kong this year, you’re probably contemplating which sort of bank you want to work for. You’re might be thinking that a bulge bracket (e.g. JP Morgan and Goldman Sachs) will pay you top dollar, but will put you through a grueling application process and demand onerous working hours. In contrast, you might have a better work-life balance at a tier-two global bank (an HSBC or a Macquarie) but you’ll surely be paid a lot less.
On the money front, however, a new pay survey from search firm Pinpoint Partners suggests these traditional assumptions are wrong – at least until you reach the senior ranks. Annual compensation (base salaries and bonuses) at tier-two banks (Pinpoint calls them ‘elite boutiques’ and ‘large financial institutions’) in Hong Kong regularly comes close to – and at some levels exceeds – that at tier-one firms, as the table below shows.
How much do investment banks pay in salaries and bonuses in Hong Kong?
Pinpoint included Goldman Sachs, Bank of America, Morgan Stanley, JP Morgan, Citi, Barclays, Credit Suisse, UBS, Deutsche Bank and Nomura in its tier-one group. Its tier-two list is made up of BNP Paribas, HSBC, Jefferies, Macquarie, RBC Capital Markets, Societe Generale and Wells Fargo.
We’ve converted the search firm’s US dollar figures into Hong Kong currency and removed the ‘MD 1’ rank (i.e. newly promoted managing directors) because there was no data available. Some of the numbers need to be treated with a grain of salt – such as those at the top left of the table which suggest that analyst-1 pay exceeds analyst-2 pay at first-tier banks. Pinpoint’s consultants, including those in Hong Kong, contacted tens of thousands of investment banking professionals globally, but these particular figures may have been skewed by a few very well-paid analyst 1s reporting their earnings.
But despite this (and some other anomalies), the overriding tier-1-vs-tier-2 trend in Hong Kong is clear: up until VP 3 level, bulge brackets aren’t much more generous paymasters than their less glamorous rivals. For example, associate 1s at tier-1 banks earn only slightly more in total comp than their counterparts at tier-2 firms. And if you’re an associate 3 (i.e. you’ve worked for roughly three years at this rank), you’re better off working for a tier-2 bank in Hong Kong, according to Pinpoint.
What explains the similarity of junior and mid-level salaries between the two types of banks? It’s largely because competition for candidates is strongest at that level. Tier-2 banks have to offer good salaries and bonuses to attract the young Mandarin-speaking bankers who are highly sought after across the Hong Kong finance sector right now.
If you want a long-term career in Hong Kong banking, however, Pinpoint’s data suggest you’re (a lot) better off at a bulge bracket. Senior managing directors (MD 3s) at tier-1 banks earn HK$27,473k (i.e. HK$27m) on average, largely thanks to their whopping HK$24,333k bonuses. It’s far more difficult to earn that kind of bonus when you’re originating smaller deals at a tier-2 bank. At these firms, MD 3s are paid a mere HK$15,306k.
Investment banking salaries and bonuses in Hong Kong: tier-1 vs tier-2 banks
Image credit: bee32
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