UBS in Hong Kong may be busy hiring for its private bank, but in equity capital markets (ECM) the Swiss firm may soon be trying to stop its top juniors from leaving.
The Securities and Futures Commission (SFC) yesterday banned UBS from sponsoring initial public offerings (IPOs) in Hong Kong for one year, following failings it made sponsoring three listings. UBS is unlikely to cut ECM jobs as a result of the temporary ban, however, because it has already changed the way it works on Hong Kong IPOs, says a headhunter in the city.
The Swiss bank began reducing its focus on sponsoring IPOs deals when the SFC started its investigation back in 2016. In September 2017, Andrea Orcel, UBS’s former global head of investment banking, said the firm would concentrate on winning global co-ordinator roles – a rung lower than sponsoring – rather than sponsorship ones, the FT reported. UBS combined its ECM and DCM teams in Asia last year, suggesting some bankers could refocus on DCM if there were a decline in ECM work. Meanwhile, UBS can still act as an IPO co-ordinator even under the new SFC suspension.
But while layoffs may not be on likely, UBS is more vulnerable to poaching raids from competitors, now that the sponsoring ban is in place, says the headhunter. A job at a firm that allows bankers to work on lucrative IPO sponsoring deals is a big draw, and recruiters will be increasingly contacting UBS bankers over the next few weeks.
UBS would not comment on the jobs impact of the SFC ruling, but the timing doesn’t appear that great from a staff retention perspective. ECM hiring is heating up in Hong Kong this month and bonuses have been paid. Hong Kong overtook New York to become the top financial centre globally for IPOs in 2018 as companies raised a total of $36.3bn in the city, a 174% increase year on year, according to Refinitiv data. The ECM job market is comparatively buoyant now as result.
US banks in Hong Kong are most likely to try to hire from UBS’s capital markets team this year, says the headhunter. Goldman Sachs, Morgan Stanley, JP Morgan and Citi make up four of the top-seven firms in Dealogic’s 2018 ranking for Asia (ex-Japan) ECM revenue. And they can offer the salaries to entice new recruits. “US banks in Hong Kong will pay more than the Europeans as they’ve generally completed more deals,” says Stanley Soh, a Hong Kong-based country director of financial services solutions.
As we reported earlier this month, bankers up to VP level in Hong Kong are most in demand. UBS will need to ensure its top-performing juniors are given enough interesting work to keep them happy for the length of the ban.
Still, it could have been worse for UBS. Last year the SFC handed out an 18-month ban related to the listings investigation. UBS appealed against this and the new SFC ruling, which UBS is not contesting, has reduced the prohibition to 12 months.
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