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Why so many bankers in China have two bosses

Setting up co-heads of investment banking is the new thing. Most international investment banks have reorganised their leadership in recent months, but what used to be the job for one head honcho has now been divided up between two senior bankers. Call it new due diligence, but what’s happening globally now has long been de facto in China, which has to deal with the difficult balance of international scope and local connections.

In the past few years, a number of global bulge bracket banks have installed a co-heads for their investment banking division across the Asia-Pacific region, such as UBS, which have two bankers working together to run the investment banking business in China. Morgan Stanley and Credit Suisse have a similar structure for its China investment banking business too. Morgan Stanley have Jing Qian and Richard Chen as co-head of china investment banking, while Credit Suisse have named George Chow and Zeth Hung as co-heads of Greater China investment banking.

On the Asia-Pacific level, Bank of America Merrill Lynch has set up co-heads of banking for the entire region. So has HSBC, which named Martin Haythorne and Liu Che-Ning as co-heads of banking for Asia-Pacific last year.

Further down the structure, Morgan Stanley even has a co-heads system for its M&A division in the Asia-Pacific investment banking business.

“I think the primary reason for banks to have a co-heads structure is to provide diversity across the complex product and geographical structure,” says Brad Miller, Hong Kong-based director of the financial sector at search firm Eximius. China is both huge and complex. It’s very hard for someone from Europe or US without any Asia experience to get their head around it. As a result, almost all global banks have hired local Chinese to run their business in Greater China alongside an experienced expat.

“If you do have a Mainland Chinese guy who’s able to look after the Chinese business, and someone else who effectively looks after everything else, that is actually a quite good split of responsibilities,” comments one Hong kong-based financial headhunter who asked not to be named. In his view, co-heads system can work if there is some sort of delineation of responsibilities, whether it’s geographical or product.

“What you don’t want is to have two people appointed to co-heads and they have proceeded to try and assassinate one another,” he adds.

Avoiding in-fighting is a major concern. One way is to make the two co-heads complementary in skills and experience. Miller points out that what’s often seen is to have one co-head with Asia experience and the other co-head, likely from head office in London or New York, with technical or team building experience. “Two co-heads provide two different mindsets so they cover each other in areas one’s lacking,” says Miller.

HSBC is a good example of this. In June 2014, it appointed Martin Haythorne and Liu Che-Ning as co-heads of banking for Asia-Pacific. Liu was then head of banking for Greater China who was based in Hong Kong, while Haythorne was HSBC’s then deputy global head of banking who was based in London. He moved from London to Hong Kong to join Liu to take up the co-head role.

This is generally good practice, but may not be the only reason why a co-heads system is adopted in the first place. The anonymous headhunter suggests that it may also be the case to accommodate senior people from around the world who otherwise have no job to go to. The bank then creates a co-head position for them in order not to lose them to competitors.

However, not everyone will be that lucky. Some bulge brackets, despite having set up a co-heads system in Asia or Greater China, actually ignore anyone from the headquarters and put two local Chinese into the posts. UBS, Credit Suisse and Morgan Stanley all have appointed two Chinese or Hong Kongnese bankers to the co-heads position. Once again, China’s sheer size and unique complexity become the main elements for consideration here.

Overall, the co-heads system seems to be the trend in Asia and Greater China, at least for now. But just as one coin has two sides, it is not without downside. The most obvious one is of course the cost: two people are more costly than one person. It won’t be a problem when business is good. Yet global banks are on the retreat in Asia Pacific since the start of the year, whether they are willing to sustain this type of co-heads system for any longer is surely watched closely within the industry.


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