More than half of investment banking roles in Hong Kong are no longer held by Hong Kongers with mainland Chinese workers reportedly dominating the sector’s job market.
60 percent of investment banking roles are now being filled by mainlanders, according to a «Bloomberg» report citing estimates from executive search firm Robert Walters. Hong Kongers hold just 30 percent of such jobs – down from 40 percent two years ago – with the remaining 10 percent held by foreign nationals.
This compares to just 15 percent of investment banking jobs held by mainlanders 20 years ago.
The trend is similar at the senior level with over half of such roles held by mainlanders, according to estimates from fellow executive search firm Wellesley.
Ethnic Advantage
The influx of mainland investment bankers coincides with the dominance of deals originating from mainland China and the report notes that the difficulty for Hong Kongers to succeed extends beyond just language.
«Most of the Hong Kong bankers, including myself, are learning how to toe the Chinese line,» said an anonymous source surnamed Tse, who noted that the Hong Konger to mainlander ratio for hiring in his division was 1 to 4. «The cultural shocks and differences are still immense.»
Ethnic Preference
Skill sets and experience alone may no longer even the playing ground as Wellesley noted that 90 percent of the searches it is now conducting in Hong Kong requires not only mandarin fluent but also «a strong preference for [People’s Republic of China] candidates».
According to Wellesley CEO Christian Brun, Hong Kong protests, political uncertainty and U.S.-China relations have contributed to the trend but the major tipping point was Beijing's decision to scrap ownership caps and further foreign participation in its financial sector.
«Everything else [...] all simply accelerate and concentrate the move onshore,» Brun said.
Industry Examples
Increasing recruitment of mainland bankers is not limited to Chinese financial institutions with Morgan Stanley and Goldman Sachs being the most notable global banks that have followed the trend.
Since 2016, Morgan Stanley has reportedly promoted around 15 managing directors originating from mainland China, compared to 11 Hong Kongers.
In 2018, Goldman Sachs appointed three mainland Chinese to its class of partners – the most ever from the country – with Hong Kongers in recent years receiving senior promotions less focused on client-facing roles like trading, research and support functions.
Expat Exit
In contrast, the number of expatriates in Hong Kong’s industry has been steadily decreasing and now account for just 7 percent of the senior hires for the region’s eight largest bulge-bracket investment banks, according to Wellesley.
What’s more, pay packages have also slipped with senior roles seeing a 15-20 percent cut compared to five years ago due to the increase of supply of investment bankers from mainland China.
Senior managing directors typically earn between $850,000 and $1.75 million compared to $1-2 million in 2015, the report added, citing an unnamed source.
