One of the biggest shake-ups of Chinese financial services in years could boost demand for investment bankers in China and cause candidates to relocate there from Hong Kong.
China is currently considering allowing foreign investment banks to run their own onshore securities units, overturning stifling rules which force them into minority-stake joint ventures (JV) with local partners.
The timetable for this potential regulatory change is unclear and could be set back if the US increases tariffs on China under President Trump.
However, if investment banks were allowed to operate independently, it could be a boon for jobs at firms such as Goldman Sachs, UBS, Morgan Stanley, Deutsche Bank and Credit Suisse, which have long felt unable to properly challenge dominant local player under their JV arrangements.
Under a more liberal ownership framework, global IBs in China would need to hire “across the board”, from the front to the back-office, says Russell Kopp, a partner at search firm Options Group in Hong Kong.
Cross-border bankers, in particular, would be in demand as global banks try to make inroads into the expanding outbound M&A sector in China. “The majority of hires would be local Chinese or local Chinese returning from overseas,” says Kopp.
But in order to ensure they have enough deal-makers on the ground, newly independent Western banks in China would also try to recruit bankers who currently cover China from Hong Kong.
Would they want to go?
Surprisingly, bankers we spoke to who’ve already made the move were upbeat about career prospects in Shanghai and Beijing and say their firms even upped their salaries to help offset China’s higher tax rates.
“There’s more competition and less business opportunities in Hong Kong than China,” says a senior banker who left HSBC in Hong Kong to join a global bank in Shanghai last year. “Though I may earn more in Hong Kong, I’d have to make much more effort to secure business there as the competition among banks is more fierce.”
Another senior banker, who relocated to Shanghai from Hong Kong with Bank of America Merrill Lynch says: “Despite the economic slowdown, I still see more growth opportunities in China than Hong Kong.”
Should China’s proposed regulatory changes take place, joining a ‘wholly-owned foreign enterprise’ (WOFE) bank in China would be particularly appealing to Hong Kong candidates. Removing the need for a local partner would potentially improve corporate culture and compliance regimes at global banks in China, say the bankers we spoke with.
Not everyone will be clamouring to join an independent foreign banks in China, however.
Kopp points out that, given Chinese banks’ domination of the domestic revenue league charts, bankers seeking to build their deal books may still prefer working at a mainland firm.
“In China your corporate connections are more important than brand recognition in winning IPO deals, therefore operating as WOFE may not help with foreign banks’ business development,” says another banker from a Western firm in China.
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