It’s been a year to endure rather than enjoy in Hong Kong banking. While private banks continued to hire and Shenzhen-Hong Kong Stock Connect provided a glimmer of year-end optimism, 2016 wasn’t the best of times for those searching for work.
We look back on some of the key trends affecting banking careers in Hong Kong over the past 12 months.
1. Closures and cut backs at global banks
Equities sales and trading jobs at global banks were in the firing line in early 2016. Barclays, Deutsche Bank, BNP Paribas, CLSA, Nomura, CIMB and Jefferies all trimmed their teams in Hong Kong as they struggled for profitability following the Chinese stock market rout and falling local trading volumes. In the second half – as it became clear that investment banking revenues weren’t meeting expectations – Goldman Sachs and BAML starting axing underperforming directors and MDs. Earlier this month, Credit Suisse had to slash its profit projections in Asian investment banking, while last week UBS reportedly cut up to 20 bankers in Hong Kong and Singapore.
2. A tipping point for Chinese banks
As redundancies hit global banks, their Chinese rivals have been better able to attract bankers in Hong Kong. CITIC Securities and China Securities were the top two firms for Asian investment banking revenues for the first nine months of 2016, according to Dealogic. And the former is hiring for its M&A and ECM teams in Hong Kong in a bid to become a full-service investment bank there. “This year marked a shift in power towards Chinese IBs in Hong Kong,” says Adam Jeffes, associate director of financial services at recruiters Morgan McKinley. “They pay less in base than their international peers, and this translates into more competitive pricing for IPOs and bond issuance. Their deeper relationships with wealthy individuals and company owners in China gives them an edge in deal sourcing.”
3. Juniorisation really took off
With their senior front-office ranks depleted, global investment banks in Hong Kong continued to ‘juniorise’ teams by handing extra work to associates and VPs. “In 2016, banks had stricter budget controls in place and emphasised internal promotions and retention of existing staff,” says Jack Leung, senior manager at recruiters Hays. “Many banks expanded the roles of current employees in an attempt to upskill them and potentially save money by not making replacement hires.”
4. More moves from IB to wealth
While Credit Suisse’s investment bank struggles for profitability in Asia, its private bank has been hiring in Hong Kong and remains on track to meet regional revenue targets. “I’ve seen more large banks, particularly UBS and Credit Suisse, move investment bankers into their private banking arms to originate deals,” says Jeffes. “The deal size for these transactions is likely to be comparatively small – perhaps lower than they would have considered taking on a few years back. But it’s still a source of competitive advantage over Chinese banks.”
5. The tech talent shortage became clearly visible
In 2016 the government stepped up its efforts to promote Hong Kong as a fintech hub, but several experts pointed out to us that the city doesn’t have enough technologists to meet demand from both banks and start-ups. “Tech has become more important to banks in Hong Kong and more fintech start-ups are launching here, but we don’t have enough technologists in the city so we suddenly find ourselves in trouble,” Arthur Wong, head of IT at China Construction Bank (Asia), told us at a conference in November. “Young people in Hong Kong have always gravitated towards jobs where they can make fast money – medicine, law, trading – and traditionally technology hasn’t been on this list.”
6. Getting a job became more laborious
Landing a job interview, or even an initial chat with a recruiter, was hard enough in Hong Kong this year – but you then faced an abnormally lengthy hiring process. In a downbeat labour market banks could afford to be fussy about who they took on. “Recruitment procedures and the time it took to make an offer to candidates were double what they were in 2015,” says Leung.
7. Candidates became more cautious
As the year wore on, recruiters say candidates – from the back office to the front – retreated into their shells. “People looking for jobs became increasingly cautious in 2016 and less proactive with their searches,” says Maggie Li, associate director of banking and financial services at recruitment agency Randstad. “I expect this trend to continue due to fewer job options available and news of retrenchments leading to increased concerns about job security.”
8. Attitudes to contracting shifted
Large banks in Hong Kong have been upping their use of contractors in tech and operations over the past three years – but they’ve traditionally struggled to attract talent. “In 2016, however, candidates have become more flexible and open to accepting contract roles,” says Matthew Dorrell, director of banking and finance at recruiters The Edge Partnership. “Banks have faced increased job-approval and headcount pressures and have also made sure that contract roles are more appealing to candidates by offering slightly higher salaries and medical benefits.”
9. Compliance people burnt themselves out of banking
Across Asia there are 53 financial regulatory change every day on average, according to Thomson Reuters. As we reported last month, Hong Kong’s legions of compliance officers are now working longer hours and increasingly suffering from burnout. But where are they going if they want to transfer their skills into a less stressful environment? Insurance became a more viable option this year as more compliance jobs opened up in that sector. “There was a rise in demand for compliance roles in insurance throughout 2016 because of new regulations being developed by the Independent Insurance Authority in Hong Kong,” says Adam Johnston, managing director of recruiters Robert Half in Hong Kong.
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