There's a dramatic shift in China's investment banking ecosystem this year. Previously dominant international banks have been displaced by local players, who have a plum positions on IPOs and big M&A deals.
It's good to know who the dominant players are. We consulted both data provider Dealogic and the rankings from Institutional Investor magazine, to find out the best banks to work for across the various investment banking divisions.
There were nine foreign banks in the top 20 in 2014, but for the same period in 2015, there are just six. Even those still remain in top 20 fell down the rankings. Goldman Sachs and Credit Suisse are the two biggest losers. They were among the top five in 2014, but dropped out of top 20 completely this year. Deutsche Bank, J.P.Morgan, Citi and HSBC all slipped in the ranking. The only exception is UBS, which jumped from 8th in 2014 to fifth in 2015.
There are still seven banks in the top 20 for DCM, but they've slipped down the rankings. In 2014 there were two foreign banks in the top five: UBS in third and HSBC in fifth, but Chinese banks take the top slots in 2015. The only foreign bank that has made some progress is J.P.Morgan, which moved up to 11th.
The ECM revenues are the most significant for overall IBD rankings of global banks. ECM activity was a record $2.6bn in the first nine months of the year, despite the IPO freeze during the summer in China, and it's the local banks who have taken the lion's share of the deals.
Significantly, the international banks with globally strong ECM teams - UBS and Morgan Stanley - were the only two to remain in the top ten. Credit Suisse had the biggest fall - going from first to slipping out of the top 20 entirely.
International banks have retained many of the top spots in M&A, but the revenue pool is comparatively tiny at $340m. Deutsche Bank is the dominant bank and both HSBC and UBS increased market share. Meanwhile Goldman Sachs has slipped from first in 2014 to 11th this year. CICC and China Renaissance Partners have split the top spots.
Arranging loans in China is not solely a business activity. It's also highly political because the capital markets are still not fully liberalized. As a result, China's large state-owned banks play a dominant role here. All big four state-owned banks, plus China Development Bank - the nation's policy bank, are all in the top 10 this year. A big loser is Bank of American Merrill Lynch, which dropped out of top 20 in 2015 from seventh in 2014.
But if international banks are losing out in advisory, they're still the key players on China's capital markets. If you work in the sales, trading or equity research, then international banks are still good to work for.