Hong Kong bankers are searching for scraps of good news right now as the coronavirus pandemic forces them to work from their bedrooms rather than crisscross the mainland clinching deals. Beijing’s decision to grant Goldman Sachs and Morgan Stanley control of their Chinese joint ventures therefore comes with added significance in a Hong Kong context. It gives a potential boost to the banks’ dealmaking clout across Greater China, and opens up the possibility of new jobs for Hongkongers who are prepared to relocate.
Goldman has been granted 51% ownership of its Beijing Gao Hua Securities JV, and plans to move towards 100% “at the earliest opportunity”, said Todd Leland, co-president for Asia Pacific ex-Japan.
This will likely have a significant impact on hiring. Goldman wants to double its mainland headcount to about 600 over the next five years, Bloomberg reported in January. These plans were reportedly contingent on GS receiving majority and eventually full ownership – but the former has now been granted and the latter may happen by the end of the year. Under a plan announced by Beijing last October, ownership caps will be removed from foreign securities firms by this December.
“China has loosened its regulations for international banks, so I predict large amounts of investment and hiring will likely come to China,” says Abimanu Jeyakumar, Hong Kong head of recruitment firm Selby Jennings.
Lack of control over their mainland securities entities has long been a bugbear for banks looking to hire top talent in China and has acted as a disincentive for Hong Kong bankers to relocate to the mainland. “But with full control on the cards, the cultural and operational differences between the onshore and offshore entities should dissipate,” says Benjamin Quinlan, a former UBS banker who now runs a Hong Kong finance consultancy.
In October, Citi became the first bank to announce it would push for full ownership in China. UBS announced plans to assume 100% control of its UBS Securities China JV in December, expanding the 51% stake that it was granted in November 2018. At the same time David Chin, head of APAC investment banking, said he wants to double his firm’s current 400-strong headcount in China over the next three to four years. Chin told us in August that UBS’s Chinese recruitment will include bankers in growth sectors such as technology, media, and telecommunications (TMT), financial institutions, and industrials. It will involve UBS’s offices in Shanghai and Shenzhen as well as its mainland headquarters in Beijing.
If you currently sit in Hong Kong and want in on the China action, there will be opportunities, but only for Mandarin-speaking high-performers, says Shanghai-based headhunter Jason Tan. About 80% of the new front-office jobs created as global banks expand on the mainland will be filled by candidates who already live in China, he adds. Relocations will likely be delayed because of Covid-19.
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. “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 late last year.
Photo by chuttersnap on Unsplash
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