Mon, Jul 08, 2019 - Page 15 News List

Wall Street banks struggle to hire local talent in China

Bloomberg

In the US, Wall Street’s biggest investment banks have been known to reject about 95 percent of job applicants. In China, it is often the other way around.

Although international securities firms are stepping up efforts to expand in Asia’s largest economy, experienced local recruits tend to prefer state-backed companies such as China International Capital Corp (CICC, 中國國際金融) and Citic Securities Co (中信證券). Even the promise of higher salaries does not always work because local rivals offer the prospect of big one-time commissions.

The talent crunch complicates efforts by overseas banks to take advantage of China’s financial opening, which has continued apace amid the country’s trade war with the US. It is another hurdle for international firms already facing stiff competition from domestic players as they battle for a slice of the US$44 trillion industry.

“Many candidates have limited interest in joining what they view as third-tier institutions in China,” said Christian Brun, chief executive officer of search firm Wellesley Partners, who has hired bankers in Asia for two decades.

Foreign firms have a limited pool to hire from because they require language capabilities and an understanding of international compliance standards, Brun said. And the reticence of bankers from the top Chinese institutions to join them only adds to those pressures.

Brun and his team have tried to interview more than 120 candidates for positions at foreign banks in China since October last year. Less than a fifth were willing to even talk, he said, while those who did were often not the top-rated talent.

That is a marked difference from the US or UK, where jobs at big name international banks, including Goldman Sachs Group Inc, UBS Group AG and Morgan Stanley, are among the most sought after by financial professionals.

Foreign banks are still hiring and expanding in China, but the limited options are forcing them to make piecemeal hires by doing some recruiting locally, hiring on campus, growing talent internally or even relocating staff from other Greater China teams.

UBS has moved 54 employees to China from Hong Kong since 2016, including 20 investment bankers, a person familiar with the matter said.

The profits of foreign banks are still dwarfed by the largest Chinese firms. UBS China reported a loss of 66 million yuan (US$9.6 million) last year, while Citigroup China had a profit of 2.6 billion yuan. The biggest Chinese brokerage, Citic Securities, meanwhile generated profit of 9.4 billion yuan last year.

Eric Zhu, a Shanghai-based manager at global recruiter Morgan McKinley, said he is concerned about whether the joint ventures can make money because the cost of running a China business is high.

The hiring challenges extend beyond investment banking. Jason Tan, director at recruitment agency Kelly Services in Shanghai, pointed to a China-based wealth management banker, who had worked at CICC for more than 10 years and received an offer from a foreign bank late last year.

Although the offer came with a 60 percent rise in basic salary, Tan said the banker did not take it because she was not sure if her total compensation would be higher than the 2 million yuan she made annually at CICC after her bonus as an executive director.

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