Category Banking & Finance

China Taps Wall Street’s Chinese Talent Pool

by CSC staff, Shanghai

Lin Kaiqing, a Ph.D. from the UCLA Department of Mathematics, was once a mathematical researcher working on such problems as Goldbach’s Conjecture. In 1997 he moved over to the financial industry and worked for Washington Mutual, JP Morgan Chase, and Credit Suisse before joining Duff & Phelps, an independent financial consulting and investment banking firm.

Born in Taiwan, Lin Kaiqing has always considered Mainland China his home. Now his biggest wish is to return to Shanghai and set up a team to operate the company’s Asian business.

The financial crisis has pushed the unemployment rate in the US to 6.7%. Wall Street may cut as many as 200,000 employees in the financial and related IT areas. Chen Xunyong, founder and chairman of Wall Street Ren, an organization of Chinese Wall Street professionals, says nearly 10% of Chinese working on Wall Street have lost their jobs.

“I have several friends that have been recently laid off. They can find a new job within months, but during this time they have begun to notice work opportunities in China that they didn’t pay much attention to in the past,” Chen said. “Our group began to pay attention to the Chinese market and job opportunities in China. I went to China last month during my vacation and met senior managers of many securities and fund companies.”

Seizing opportunities in China

Chen was surprised at Chinese investment companies’ overseas strategies and eagerness to invest overseas, and sees great opportunities in China

“Originally we founded this group to offer Chinese working on Wall Street a communication platform and to assist domestic governments and organizations recruiting in the US. But it’s the first time for us to go back to learn about China and form a dialogue mechanism.

After taking the first steps, Wall Street Ren began to contact Chinese organizations and recruiters more frequently and introduce China to its members. For many Wall Street professionals who having been working in the US for many years, going back to China would be a “great leap”.

“In the past, many Chinese went back home soon after finishing financial courses in the US and didn’t have rich working experience. Now it’s different. Those returning or who have already returned are often senior professionals above manager level.

Chinese companies, including the China Investment Company, have been issuing recruiting advertisements in overseas media such as The Wall Street Journal. Overseas Chinese professionals are beginning to realize Chinese financial firms’ determination to expand overseas business and recruit overseas talents.

Among talent going back, 50% choose to work in Hong Kong, and the rest come back to Mainland China. “According to our figures, of the senior positions in Wall Street financial institutions occupied by Chinese, 90% are by Mainlanders.

Worries still exist

“Of course we still have concerns. I never drink wine, and I’m afraid I can’t get used to the working environment in Mainland China,” Lin Kaiqing told China Business News, adding that some possible returnees worried if they’ll be able to accommodate themselves to the Chinese working environment, which requires high sociability.

Lin Kaiqing’s biggest concern is whether his 11-year-old son and 5-year-old daughter can accommodate themselves to a pure Chinese teaching environment.

Lin Kaiqing has always planned to return to China when his children are grown. “I first planned to go back to LA after retirement, but now, although I think LA is good, it’s not my home. I must go back to China, my real home.”

Some of Lin’s friends have already returned to China, and one of them is now working for Everbright Bank. They all say their life in China is very pleasant. Lin is considering a return to China after his company is licensed to establishment a Shanghai branch.

High salary

In December, recruiters from Shanghai, Beijing, and Nanjing will fly to New York, Chicago, San Francisco, and Boston to recruit Wall Street talent. The Mayor of Nanjing even flew to New York himself. Positions open to Chinese Wall Street talent include international financial market investment, financial and economic research, asset management, risk control, financial derivatives development, industry risk analysis, and creative supervision.

Nanjing also wants to bring in expertise in electronic and biological technology from the San Francisco Bay Area. Recruiters from Shanghai include the Shanghai Stock Exchange, the government of Pudong District, Shenyin Wanguo Securities Company, Guotai Junan Securities Company, Shanghai Pudong Development Bank, and Citic Bank.

“Salaries will be lower back in China. In the US an annual salary for a senior manager in an investment firm can amount to millions of dollars, and domestic institutions can’t pay so much. But money is not the reason they go back,” said Chen Xunyong. “And of course the salary gap is narrowing some.”

Lin Kaiqing also said he was surprised when he heard domestic companies are willing to pay four or five million yuan per year to Wall Street talent. For him, this is really a big move, as big as the 4 trillion yuan economic relief package.

Chinese see opening to recruit western staff

Out-of-work finance professionals in the UK and US have a new reason for optimism about their employment prospects – especially if they speak Mandarin.

Chinese financial institutions are set to exploit the widespread job losses in western financial centres as a result of the credit crunch by next month embarking on a hunt for financial experts willing to relocate.

The Shanghai Financial Service Office has told state media the city is sending a delegation to New York, Chicago and London to recruit specialists in risk management, asset management, product research and development, macro-economics and policy analysis.

The head of human resources at the office said at least 27 financial institutions in Shanghai, China’s commercial and financial hub, had listed more than 170 vacancies specifically targeting foreigners.

The global financial turmoil has led to tens of thousands of job losses in financial services.

London and New York have been hit especially hard, while many of those still in employment fear for their future.

However, the salaries on offer in China are unlikely to meet international standards and a preference for those who understand and speak Mandarin Chinese will probably rule out many potential candidates.

In addition, China’s unique political environment, in which the Communist party exercises ultimate control over all aspects of the financial, legal and commercial systems, means foreign passport-holders are unlikely to be given senior positions in state-run institutions.

China Investment Corp, the country’s sovereign wealth fund, launched a global recruitment drive earlier this year but it was unable to match the salaries on offer in the City or on Wall Street.

Shanghai officials said organisations interested in recruiting in the UK and US included the nascent China Financial Futures Exchange, the Pudong financial district government, and state-run securities agencies, insurance companies and also banks.

The delegation will also try to recruit an assistant to the president of Shanghai Financial University, a chief economist for the SFU’s International Finance Research Institute and a dean for its International Finance and Insurance School.

Academic posts are more likely to be offered to

foreigners as such positions are considered less politically sensitive.

China’s state-owned Assets Supervision and Administration Commission has said it encourages the country’s largest state companies to recruit internationally, but the number of foreign employees at those companies is still negligible.

All senior managers above a certain level at state companies are appointed by the secretive Communist party personnel department, regardless of the wishes of board directors or share-holders.

China and Emerging Markets May Draw Talent from Waning Wall Street

Thousands of financial workers on Wall Street are losing their jobs during this financial crisis, leading to a great dislocation of financial talent.

The so-called hot job and hot department in the financial industry will be redefined. Enthusiasm over investment banks such as Goldman Sachs and Lehman Brothers will wane, and attention will move back to the steadier, more conservative, and less risky financial institutions such as commercial banks. The internal structure of financial institutions such as banks and insurance companies will also change. Some functions such as risk management, which used to be neglected, will be repositioned and revalued. Some financial workers will have to change their professional orientation, since positions related to investment will weakened or even disappear.

Compensation and professional quality in the financial industry will also be redefined. Greed and lack of self-discipline are at the root of the financial crisis. Wall Street, with its high compensation and luxurious life styles, brought too many dreams and too much pride to too many young people, where a graduate could get a high salary fresh out of school. But now things will calm down. Too much risk lies behind irrational success and irrational wealth growth.

In the following years, the former attractiveness of investment banks, mutual funds, hedge funds, private equity funds, and leverage buyout funds is going to fade. With the crazy age coming to an end, compensation levels on Wall Street will no longer be No. 1 in the US. Wall Street will no longer be the only choice of top MBA graduates, as they will once again consider traditional and high-tech industries. High quality professional managers with will also flow to other industries.

Since the crisis, people begin to consider the ethical standards of the financial system. Wall Street and European financial markets are all considering what kind of senior managers, CEOs, and CFOs financial firms need. Further lessons on how to avoid and control risk are being learned by financial institutions. What kind of culture should be admired in financial firms? In the past, the trader, passionate, adventurous and ready to go to extremes, was the admired model. But now, at least for a while, banks are laying off the traders, and risk managers are not only keeping their jobs but being poached and headhunted as banks seek to shore up their internal control departments.

China’s industry will be more attractive to Chinese financiers. Due to downsizing in the US, Chinese employees there will also be looking for jobs. Under the circumstances, coming back to China may become their best choice. At least China’s overall economic and financial situation is still better than the US and Europe. Now many Asians are considering returning to their emerging markets, as they are more likely to find jobs there, even though the financial markets in these countries are far from their expectations. This may trigger a series of talent competitions among domestic financial institutions.

In fact, more and more western professional managers, having faith in opportunities and challenges in China and its neighboring markets, were participating in the domestic financial talent competition before the outbreak of the subprime crisis. But now the requirement for talent in the domestic financial market will include not only professional knowledge and financial management skill, but also the knowledge about China’s local culture and commercial environment, which will be as important as financial tools for some positions.

Shanghai companies eye Wall Street talent

Financial institutions in Shanghai are likely to start snapping up jobless Wall Street professionals by the end of this year.

Some local fund and securities companies, led by Shanghai financial working commission, may go to Wall Street later this year to hunt for possible recruits, according to a top executive from Shanghai-based fund company Huaan Fund.

“Although the city is becoming more of a player in the global financial market, we have a dearth of employees with global financial expertise,” said a senior official at the firm surnamed Xie.

He added that the company recently received a notice from the local financial working commission, but a detailed schedule has yet to be arranged.

Huaan started recruiting foreign talents for top positions in 1999. “Investment managers and legal talents from Wall Street investment banks would be our major targets. Talents with overseas backgrounds would help boost our competition in the market,” Xie said.

Some fund managers also said that the salary expectations of top Wall Street professionals may fall given the current global financial turmoil.

The local financial working commission could not be immediately reached for comment.

“Operational efficiency is critical to support portfolio realization in the financial sector, and Wall Street talent has experience of the ups and downs in financial sector business,” said Jenny Li, managing director of Hewitt Greater China, a human resources consulting firm.

Domestic companies are short of talents with leadership who can compete in a globalized economy.

“The introduction of Qualified Domestic Institutional Investors along with the opening up of renminbi business to foreign banks has provoked a huge demand for financial talents in product development and risk control,” said Christine Cheng, practice head of accounting and finance at a staffing sources firm Manpower China.

But Li warned Chinese financial players that they have to align their business strategies when hunting for various talents on Wall Street.

Top China economist Hong Liang quits Goldman Sachs

HONG KONG, Aug 26 (Reuters) – Goldman Sachs’ senior China economist, Hong Liang, has resigned amid reports saying she plans to join a mainland Chinese competitor.

A source at the investment bank (GS.N: Quote, Profile, Research, Stock Buzz) said on Tuesday that Liang had a disagreement with the bank’s management and wants to move into capital markets. Liang could not be reached for comment. A Goldman Sachs spokesman said Liang, a Hong Kong-based executive director of Asia economic research at the bank, resigned last week.

According to the South China Morning Post newspaper, she is likely to join Beijing-based investment bank China International Capital Corp (CICC), which is partly owned by Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz). CICC could not be reached for comment.

The Goldman Sachs spokesman denied a report in the South China Morning Post that professor Song Guoqing, a senior economist at Peking University, had also resigned as an adviser at Goldman’s China joint venture, Gaohua Securities. (Reporting by Alan Wheatley and Susan Fenton, Editing by Ken Wills)

Blackstone to open Beijing office

Robin Marriott

Blackstone is ramping up its regional presence in Asia with its first office in mainland China.

The group has so far opened offices in Tokyo, Mumbai and Hong Kong, but it is poised to add to the network with an office in China’s second biggest city and political hub.

Stephen Schwarzman, chairman and chief executive of the group, revealed the move as he outlined the firm’s growth around the world during a presentation at the Bernstein Strategic Decisions Conference in New York yesterday, telling delegates: “We just signed a lease in Beijing.”

In the last ten years, he said, Blackstone had opened in London, as well as a smaller office in France, Hong Kong, Tokyo and India.

“We are very rapidly growing. From 2005 to the current day staffing has grown by 100 percent as we move around the world. It is a business with enormous dynamism and 1,200 people,” he added.

Blackstone opened an office in Mumbai in 2005 to handle private equity and real estate investments and followed that up last year when it opened a satellite office in Hong Kong from where former Hong Kong financial secretary Antony Leung is directing operations as chairman of Blackstone Greater China. Earlier this month, the firm added new impetus to the region when it announced the launch of a hedge fund business Blackstone Altius Advisors, which it called a new “event-driven” strategy focusing on opportunities in the Asia Pacific region. That business is being headquartered in Hong Kong.

In an interview with PERE in March, president and chief operating officer Hamilton James said the firm was busy staffing up the Hong Kong office with real estate professionals. At the same time, he said the firm was adding professionals in Tokyo and Mumbai. Speaking of Asia, he told PERE: “Those markets will be a much larger portion of our real estate investing activity than they have been historically.”

Blackstone’s other activities in Asia include a fund of hedge funds and two closed-ended mutual funds, The India Fund and The Asia Tigers Fund. Its 10th real estate fund, which closed in April on $10.9 billion, and its fifth global buyout fund, closed on $21.7 billion in August 2007, are active in the region.

President of China Minsheng Bank tops banking sector income chart

Annual reports from several Chinese banks over the weekend reveal sky-high salaries for the senior management boards in China’s banking sector. China Minsheng Banking Corporation stands out with the highest paycheck.

Dong WenBiao, the president of China Minsheng Bank, tops the income chart. His annual pre-tax salary reached over 17.5 million yuan last year.

China Merchants Bank is also being generous to senior executives. In 2007, it doled out 53 million yuan to 26 board members and executives, and its CEO, Guan MaWei, earned nearly 10-million yuan pre-tax.

The Industrial bank paid out nearly 16-million yuan to 15 board members and executives. And its president, Gao JianPing, earned nearly 3 million yuan.

Recruiter reports banking slowdown

A financial services recruitment firm has reported a further weakening in the UK banking sector.
Michael Page International plc published its interim management statement relating to the period from 1 January to 31 March 2008, the first quarter of the financial year ended 31 December 2008.

For the first quarter of 2008, Michael Page reports a record quarterly group gross profit of £140.3m, an increase of 33.0 per cent (23.8 per cent) over the £105.5m recorded in the first quarter of 2007.

In the group’s largest region, Europe, Middle East and Africa (EMEA) representing 46 per cent of its gross profit, first quarter gross profit was £65.2m, an increase of 55.3 per cent (37.7 per cent) over the £42m recorded in the first quarter of 2007.

“With good activity levels, we continue to experience strong demand for talent across all countries and disciplines, with the exception of banking,” the firm said.

In the UK, representing 34 per cent of group gross profit, first quarter gross profit was £47.1m, an increase of 6.7 per cent over the £44.1m recorded in the first quarter of 2007.

“While it is not possible to quantify, our first quarter growth rate was affected by the early Easter break and a further weakening of the banking sector, which is also impacting some of our other disciplines that service banking clients,” according to the group.

Outside of these banking related areas Michael Page International reported good activity in job and candidate flow.

In Asia, the group’s businesses grew gross profit at 11 per cent, with China, including Hong Kong, continuing to grow strongly, offset by a slowing in its Tokyo business, where banking represents a higher proportion of the business.

Steve Ingham, chief executive of Michael Page International (LSE:MPI), said, “Whilst we continue to experience strong activity levels and demand for talent, in certain areas there are signs of more cautionary behaviour.”

Foreign banks thirst for local talents

Sun Minjie, executive vice-president of Bank of East Asia in Shanghai, was happy that he didn’t have to offer too much money to find suitable staff for the newly opened Qingdao branch a year and half ago. An auditor he poached from an accounting firm in the city demanded only 5,000 yuan ($714.29) a month, compared with about 30,000 yuan for someone with equivalent experience and qualifications in Hong Kong.

Last month, that person quit to join another bank in Shanghai although Sun tried to keep him by hiking his monthly pay to 25,000 a month.

“What a difference 18 months made,” sighs Sun. But this is far from being a unique case. Job-hopping has become common among the local staff of foreign banks and other financial institutions.

“There are many cases like this one (among foreign banks in China),” says Sun.

The fight for qualified talent in the financial sector, especially in Shanghai, has initialized a massive restructuring of executive pay scales that are extending to many other sectors.

Following the full opening of the nation’s banking sector in late 2006, overseas lenders are embarking on a rapid expansion in China, but the race for qualified and experienced workers might slow their pace.

In a survey by PricewaterhouseCoopers last year, 40 overseas banks polled said that finding and retaining good personnel was the second-most difficult job in the Chinese banking industry.

Twenty-five banks will more than double their China staffs by 2010, according to the survey, while six plan to add more than 1,000 employees over the next three years, and three will hire 3,000 people.

Of the 40 banks that polled, 35 percent recorded annual staff turnover rates between 15 and 20 percent. Only a small group of large international banks have been able to keep that rate below 5 percent.

It’s not hard to find someone with lower qualifications in the market, Sun says, though what the overseas institutions really need are experienced and trained workers to support their rapid growth.

Yet for large international banks, frontline workers are among the most needed. But rather than an ample supply of young graduates, experienced people are what banks really need because they are supposed to work in a sector that not only stresses innovation but also risk management and control.

“There is an escalating need for staff, especially frontline workers, to support our fast-expanding retail banking business,” says Paula Ko, head of human resources at Standard Chartered Bank (China) Ltd.

“The demand is so fast and huge, and happens across the country,” says Ko, whose bank doubled its China staff from about 2,000 in 2006 to its current 4,000.

To handle the need for proper personnel, the London-headquartered bank has transferred some workers from its corporate department to retail banking.

But for the long run, Standard Chartered’s China consumer banking head Christine Ip says the bank will rely on both campus recruitment and poaching from the market.

In addition to those who have direct contacts with the customers, skilled personnel are acutely needed for new businesses that foreign banks are carrying out, bankers say.

Personnel familiar with wealth management, private banking, credit cards and treasury departments are all needed.

HSBC, one of the largest financial groups in the world, made the race for private banking professionals more intense by launching offices on March 31 in Beijing, Guangzhou and Shanghai.

The bank expects to grow the number of its private banking managers from 9 – all local Chinese – to 18 by the end of the year, and to about 40 shortly after that.

What HSBC needs are mature, intelligent professionals who have a lot of networks in China, says Yvonne Hsin, deputy chief executive of HSBC’s private banking for Asia.

Declining to comment on how much the bank is willing to pay or at what the talent shortage in China is costing the bank, she only says HSBC will stick to “benchmark prices” on the market and stresses that people the bank hires will be trained in both China and overseas.

Foreign institutions are taking steps to find and retain their best employees with diversified recruitment drives and significant salary boosts.

Standard Chartered keeps a close eye on salary fluctuations in the job market to keep salaries for its own employees competitive.

It has also diversified approaches to recruit candidates from universities, head-hunting agencies and job fairs, while enlisting the ones recommended by colleagues and people from outside of the banking industry.

At smaller overseas banks, which are at a disadvantage when competing with larger rivals, measures are being taken to counter the personnel gaps on the Chinese mainland.

“It is critical to build a pool of talent as we grow our business in China,” says Leong Wai Leng, chairwoman of OCBC China, a Singapore-based bank.

“People are our most valuable asset.”

Aiming to grow its China staff from 300 to over 1,000 by 2010, OCBC uses a three-prong approach to attract and retain talents.

For starters, the bank recognizes and rewards employees for outstanding performances, as well as grooming them for leadership roles in the bank.

“Our compensation package is geared towards rewarding our high performers through differentiated incentive compensation schemes, where we offer our high performers performance-based bonuses and various other incentives in addition to the market-oriented and competitive base pay,” Leong says.

To attract employees, OCBC started several programs to allow employees to pursue a career in different divisions in order to help employees evaluate their strengths during their first 3 years with the bank.

Goldman Appoints a New China Chief

HONG KONG — Goldman Sachs Group Inc. named Cai Jinyong, an eight-year veteran of the firm, as chief executive of its Chinese securities joint venture and head of Goldman’s China investment-banking business, according to an internal memo reviewed by The Wall Street Journal.

The promotion of Mr. Cai, who made partner in 2006, should bring some stability to the top ranks of Goldman’s China operations after the departure of Richard Ong, its most senior Beijing-based banker, this month.

Mr. Ong, Goldman’s co-head of investment banking in Asia excluding Japan, is leaving to help run a new private-equity fund raising over $2 billion. He will be joined by Fang Fenglei, the chairman of the joint venture, Goldman Sachs Gaohua Securities Co. Mr. Fang continues to serve as chairman of the joint venture, which was one of the first such Chinese JVs, formed in late 2004.

Mr. Cai will succeed Zha Xiangyang as CEO of the joint venture. Goldman said in the memo that Mr. Zha is leaving the firm. Mr. Zha didn’t reply to an email seeking comment.

Mr. Cai, 48 years old, brings extensive China experience. He most recently led Goldman’s team of China bankers dedicated to landing deals in oil, gas and power. Born in China, Mr. Cai earned a Ph.D. in economics at Boston University, graduating in 1990. He then worked for the World Bank, before starting his investment-banking career at Morgan Stanley.