Should I opt for a local or a foreign firm? It’s a dilemma facing many young Japanese bankers. Below are four factors which are helping them to make up their minds either way.
English skills can be crucial, with bilingual candidates often tempted by foreign banks, says Mika Nomura, business director, Hays Banking.
“If candidates are not that confident in their language skills, they may prefer to work in more of a Japanese-based reporting system than join a firm that will expect a greater amount of English reporting,” adds Martin Eastgate, senior consultant, CDS.
But just how good does a candidate’s English need to be? “The question we ask is ‘can you manage an English interview?’ A candidate doesn’t have to be fluent, but does have to be able to understand and respond during the interview,” says Nomura.
Compensation can be a reason for joining an overseas bank. “Across all teams and levels, foreign firms will typically outperform Japanese banks on pay levels and especially bonus pools,” says Eastgate.
While western institutions usually focus more on individual performance-related pay, Japanese bankers often have uniform salary increases depending on years of experience and time at the bank.
“A first-year analyst in a foreign bank can easily earn twice as much as a peer working in a local firm. With the focus on individual reward, talent retention becomes more of an issue, which fuels the bonus culture within foreign banks,” says Eastgate.
Yet not all candidates are motivated by money. “Many Japanese graduates prefer to opt for the greater stability Japanese banks can offer,” says Nomura. The same is often true for mid-level Japanese candidates made redundant from foreign firms.
Eastgate says: “When certain product areas are struggling or non-profitable, foreign firms will be quicker to lay off staff. Japanese firms on the other hand will freeze salary rises and bonus pools across the firm to avoid lay-offs. Redeployment of staff from one team to another is also easier for Japanese firms as bankers typically move around product areas.”
Japanese banks also tend to do well in the prestige stakes. As a result, Eastgate says he often works with candidates who are discouraged from leaving a major local firm in favour of a foreign one.
“Sometimes this might be due to perceived risks, especially with a greater chance of possible redundancies if the markets falter, but this can also be related to social standings. Younger candidates can be heavily influenced by wives, husbands, parents and in-laws to remain with a local firm for prestige within social groups, and networking.”