UBS’s big hiring plans may lure more Hong Kong bankers across the border

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UBS is being particularly open about its new recruitment plans in China. While banks typically don’t reveal exact hiring targets, especially in emerging markets, head of APAC investment banking at UBS,  David Chin, said yesterday that he wants to double the current 400-strong headcount of UBS’s China IB joint venture over the next three to four years.

Chin told us in August, before the headcount figures were announced, that UBS’s Chinese recruitment will include bankers in important sectors such as technology, media, and telecommunications (TMT), financial institutions, and industrials. The expansion will involve UBS’s offices in Shanghai and Shenzhen as well as its local headquarters in Beijing.

The bullish hiring outlook follows an announcement in UBS’s third-quarter earnings results that it wants to take advantage of China’s accelerated removal of ownership caps for foreign securities firms and assume 100% control of UBS Securities China by 2020, with an exact date to be confirmed. UBS currently has a 51% stake in the joint venture, which it was granted in November last year, making it the first global bank (aside from HSBC, which enjoys a special regulatory arrangement) to secure majority ownership in China.

UBS’s bid to take on 400 people in China will involve significant numbers of front-office bankers, say headhunters. While the majority of them will be hired locally, Chin told us previously that UBS will also source staff from Hong Kong, a city with a deep talent pool within the fields that UBS Securities China specialises in, such as debt and equity underwriting, and financial advisory. Moreover, many bankers in Hong Kong already cover China and spend their lives jetting back and forth from the mainland.

While Hong Kong-based bankers have traditionally been reluctant to relocate, UBS’s big hiring plans and its bid for total control may potentially cause some of them to reconsider. JPMorgan and Nomura were granted 51% stakes in March, while banks including Goldman Sachs, Morgan Stanley and Credit Suisse have applied for this level of ownership. Some or all of these firms may soon follow UBS’s lead and go for a 100% stake.

Lack of control over their mainland entities has long been a bugbear for banks looking to expand in China and has also acted as a disincentive for Hong Kong bankers to move. “But with full control on the cards in the next 12 months, the cultural and operational differences between the onshore and offshore entities should dissipate,” says Benjamin Quinlan, a former UBS banker who now runs a finance consultancy.

Quinlan says many bankers in Hong Kong now understand that the “ongoing liberalisation of China’s capital markets is opening up some very interesting opportunities to work on the mainland, especially in currently nascent areas like derivatives, where there is huge growth potential”.

Some Hong Kong bankers already want in on the mainland action. “I’m working on various moves in which Hong Kong bankers are keen to take up China-based jobs,” Hubert Tam, managing partner of Hong Kong search firm Sirius Partners, told us recently.

Shanghai-based headhunter Jason Tan says the expansion of foreign banks like UBS in China will “generate a new wave of interest from Hong Kong bankers”. “China remains a very active job market for bankers despite the cooling down of the economy,” he adds.

But just because some Hong Kong bankers are suddenly more interested in Chinese vacancies at UBS and its rivals, doesn’t mean landing a job in China will be straightforward. Global banks in China are largely only keen on relocating Mandarin-speaking high-performers, says Tan. About 80% of the new front-office jobs created as global banks expand will be filled by candidates who already live in China, he adds. Hong Kong will provide some of the remaining talent, in particular people at SVP to MD level who are relocated because of their client networks and product knowledge.

Meanwhile, despite the emerging attractiveness of mainland jobs, a substantial number of Westerners in Hong Kong and local Hong Kong bankers don't speak Mandarin and will always remain reluctant to relocate. “Lifestyle and tax considerations are still very relevant for Hong Kong bankers, as are other considerations like the ability to build a local network relative to mainland Chinese nationals,” says Quinlan.

Several finance students we spoke with in Hong Kong this week told us that while the civil unrest in their city and the growth of foreign banks in China have made mainland roles look increasingly appealing, they doubt their ability to compete with Chinese graduates for jobs. “I’m not connected in China, and I don’t know the financial system and work culture well,” says a finance major from HKU.

Image credit: @purzlbaum, Unsplash

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