If you’re an analyst or associate in Hong Kong and you specialise in debt capital markets (DCM), it’s increasingly likely that your next job will be at a Chinese bank – if you’re not working for one already. Not only do Chinese banks dominate Asian DCM deals, they’re also hiring juniors in Hong Kong (as well as in Shanghai and Beijing) on the back of this recent success.
Eight of the top-10 banks for 2018 APAC (ex-Japan) DCM revenue are Chinese (HSBC in 7th spot and Citi in 10th are the exceptions), according to new data from Dealogic. CITIC Securities is in first place, with revenue of $267m and a 7% market share, followed by China Securities and Bank of China.
Mainland banks top the table because China is the linchpin of Asia’s dollar bond market. Chinese borrowers made up about 60% of the $198bn of notes sold in Asia during the nine months to September 2018, reports Bloomberg. “If the Chinese DCM market were ever to cool off, we’d see this league table change, but until then other DCM markets in Asia remain comparatively small,” says Sandeep Mohanan, a senior front-office manager at recruiters Morgan McKinley in Hong Kong.
DCM bankers at Chinese firms have the “strong guanxi” needed to win clients and work on deals that typically involve multiple local bookrunners and co-ordinators, says Shanghai-based headhunter Jason Tan. “Chinese banks have in-depth relationships with one another,” he adds. “And they offer smaller fees compared with the foreign banks. The last DCM banker I interviewed admitted that his bank would do a deal for ‘face’ with the client, even if it was loss making.”
While Asian DCM hiring at Western banks is likely to be subdued this year, Chinese banks like CITIC will be adding headcount, including in Hong Kong, where some of their DCM staff are based thanks to the city’s large talent pool in the function. “More staff are needed as the Chinese debt market continues to grow,” says Tan.
This recruitment will focus on analysts and associates with native-level Mandarin skills. “Chinese firms predominantly want junior bankers with sales, financial analysis, due diligence and structuring experience,” says Tan. “Chinese banks’ DCM teams are typically headed by an SVP/MD banker, with an average team size of 12 to 16 people.”
At a senior level, however, Chinese banks aren’t doing much hiring in Hong Kong, which is probably just as well. Rainmakers in the territory still aren’t inclined to work for mainland firms, says Tan, primarily because their company cultures and bonus allocations aren’t attractive enough.
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