A year ago, vice presidents (VPs) were in line for large pay rises across most functions at banks in Hong Kong. Not any more – unless you work in M&A or in some middle and back-office roles.
Before the onset of China’s market turmoil banks were hiring in healthy numbers and VP candidates were especially thin on the ground because cuts to graduate recruitment following the financial crisis had stymied the pipeline of people rising up through their ranks.
Now, while being a VP in Hong Kong may give you job security and extra responsibilities as banks cut expensive director-level jobs, it won’t necessary mean you’ll get a big annual pay rise.
Using the Hong Kong salary survey from recruiters Robert Walters, we’ve compared base pay for VPs (people with about six to eight years’ experience) in 2015 with their earnings this year. As the table below shows, just 11 out of 28 job sectors surveyed show any year-on-year rise – and only one of these outliers is in the front-office: mergers and acquisitions (M&A).
The results are in keeping with our prediction in November last year that salary rises in Hong Kong would cool off thanks to slowing economic growth in China and a glut of unemployed candidates entering the job market after lay-offs at banks like Standard Chartered.
So why did base salaries for VPs in M&A shot up 14.3% between 2015 and 2016, even as investment banks in Hong Kong cut jobs in other functions (in particular equities trading)?
Investment banks are now after a particular type of VP in M&A: those exposed to helping Chinese corporates buy assets overseas. Cross-border M&A by Asia Pacific (ex-Japan) acquirers totalled US$235.6bn in 2015, the highest year on record, according to Dealogic.
Despite a quiet first quarter in Asian M&A, mid-ranking bankers skilled in executing deals for mainland clients are both still sought after and in short supply, say headhunters. Competition for candidates is also buoyed by Chinese banks wanting to recruit similar people to their global rivals in Hong Kong. Pay rises are ensuing as a result.
Away from M&A, treasury accounting tops the salary-rise list as banks continue to look for more accountants to step up into the more strategic treasury function.
Recent market turmoil in China has led to asset management firms having to hire more equity researchers – and the survey results suggest their pay has gone up (by 14.6%) accordingly. Similarly, market risk pay at VP level in Hong Kong has risen as banks hire more people to help them manage Asian market volatility.
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