IFR/IFR Asia Year-End Review
Banking headhunters in Asia reported one of their busiest ever years in 2010. It’s not that there was any one area of booming business where every bank had to make a hire, nor a single country in which everyone needed to step up. But that was the point: everybody seemed to be hiring across the board.
“This has been the busiest year we’ve seen,” says Christian Brun, partner at Wellesley Partners. “It topped 2007, and a lot of people didn’t manage to do the hiring they wanted to do.” Brun says there was activity across all areas of investment banking: equities, fixed income, asset management, with particular vigour in China, natural resources, FIG and industrials.
Others saw selected areas of strength. John Wright at Global Sage says that “most of the recruitment work in banking has been around bolstering businesses that were moving through the cycle, from liabilities management to asset management. And, since the recovery wasn’t as V-shaped as people as hoped, the sell side was far more active than the buy side.” He says there were big build-outs in both fixed income and equity, and a lot of expansion in private banking.
“Another theme has been the move away from proprietary trading, private equity and principal strategies into relationships,” Wright adds. “People have hired a lot of senior relationship managers for all products.” He sees particularly strong hiring in support functions, such as operations and technology staff.
In China and India in particular, competition for talent has become intense. “The two strongest stories continue to be China and India, and there’s been continued movement and building of teams there throughout the year,” says Harry O’Neill at Heidrick & Struggles. “There is always pressure there to find the best people.”
Brun adds: “Decent, senior China bankers all have three or four offers. Lots of people are bidding back as well.” Banks such as Deutsche and UBS are said to be throwing a lot of money at people to stop them from leaving.
The competitive environment has become particularly intense because of the growing heft of local players, at various different levels. There are big and historically powerful institutions seeking to staff up or move into new areas, like Samsung and Daiwa, who are said to be leading with the chequebook and offering two year cash guarantees in order to attain market share. There are local and relatively newly-established houses building critical mass, like Religare and Renaissance Capital, or established domestic houses seeking more experienced staff, such as China Development Bank. And there are global boutiques such as Perella Weinberg Partners, which has been building a presence in Beijing.
“Some of the most interesting trends have been emerging players like Rencap [Renaissance Capital] and Religare hiring some very talented people,” says O’Neill. These are the two names mentioned most frequently in connection with the regional hiring theme, and they have indeed been busy: in September alone, Religare hired Nalin Nayyar from Citi as head of investment banking for India, and Jason Todd from Morgan Stanley as global head of equity strategy. And Renaissance, which in June confirmed plans to open a Hong Kong office, hired former JP Morgan and Credit Suisse banks Nick Andrews as global head of equities during the year.
“These emerging market capital flow stories, with the increasing self-reliance of Asia’s capital markets and stories that go from Russia to Africa to China and India, are going to be very interesting,” says O’Neill. “The fact that some very heavy duty people are choosing to move to those firms is indicative of an overall shift. They are not necessarily taking business away from the big firms, but some emerging market players are becoming very interesting alternatives for senior people from big firms.”
Wright agrees. “The real theme this year was the regional players making some very big hires,” he says. And regional players pay as well as internationals? “Sure. They have to.”
Among the bigger, established players, there are pockets of activity but nothing to quite compare with the scale of ANZ’s hiring in 2009. “ANZ was more of a story in 09 than 2010,” says O’Neill. “They were able to be a countercyclical recruiter in 2009; it’s a bit more difficult for emerging players in 2010.” Probably the most notable build-out has been Barclays, which has sought to turn its traditional strength in debt into a broader full-service investment banking presence, including a high-profile build of its cash equities business. Recent hires have included Kirk Yang, head of technology hardware research, from Nomura; Andrew Lu, head of technology semiconductor research, from Citi; Mark Kellock, head of insurance research, from Macquarie; Andrew Lawrence, head of regional property research, from Samsung; Vineet Sharma, head of consumer research, from JP Morgan; and May Yan, head of China banks research, also from Nomura. “It’s had an impact on the market,” O’Neill says. “One big build sets the annual musical chairs round in motion.” Barclays has also made some big hires in M&A.
Standard Chartered, too, has been actively hiring; indeed, unusually, the transactional side of banking has been among the most active areas, with constant movement and poaching between Citi, Stanchart, HSBC and Deutsche, among others, as well as the fact that most ANZ hires have been in this area. Take a look at cash management, for example, where HSBC has made senior appointments in Korea, Indonesia, China, Thailand and Vietnam, including new global payments and cash management heads in three of them; RBS has hired a new head of regional sales, Teoh Jin Kok, from HSBC and is set to announce a new head of regional product, on top of new senior appointments in Australia, China, Hong Kong and Malaysia; Citi has increased its regional cash headcount by 8% over a year; Deutsche has doubled the size of its Asian cash financial institutions coverage team; and DBS has hired 110 new customer-facing officers.
Opinion is divided on what’s happening to salaries. O’Neill says remuneration is “not going up right now,” although base salaries sometimes are in order to get around G20 regulations on base multiples in bonuses. “Compensation for 2010 will as always be based on revenue totals, and they are less strong than last year,” he says. Star bankers are going to remain exceptionally well-paid, though some feel that in the mainstream compensation could come down 20 or 30% from 2009 – although not, presumably, in booming areas like equity capital markets.
John Wright, though, says that compensation “has had a V-shaped recovery on the sell side,” and believes people are being paid what they were in 2007, albeit in some cases that figure is still lower than it was in 2002. “But I don’t think pay is exorbitant yet,” he says.
So what was the biggest individual move in 2009? Most point to Henry Cai’s move from UBS to Deutsche to be the China banking successor to Lee Zhang, and then the related round of hires it triggered, such as Wei Cai joining UBS from Morgan Stanley. Others include Mark Williams, UBS’s head of equity capital markets for the region, going to Nomura to run ECM there – another build of a new business, since the Lehman business Nomura bought in Asia had little equities presence – and Steven Barg, UBS’s regional head of global capital markets, moving to Goldman Sachs. UBS has, somewhat unfortunately, been on the wrong end of most of the more significant moves in the last 12 months. But, as Brun says, “every single bank has seen some pretty big hires.”
Within the financial recruitment industry itself, the bigger moves happened in 2009, as some established local names like Eban and Whitney lost ground or disappeared, generally at the expense of the hiring spree by Heidrick & Struggles. In 2010, it’s been the same names turning up everywhere: Heidrick, Executive Access, Global Sage and Wellesley. If one broadens the scope to wider recruitment then the big multinationals like Korn Ferry, Russell and Egon Spencer are powerful, but they tend not to be so active in Asian investment banking. There was a sense this year of settling and getting on with work rather than reshaping the industry. “In 2010 we had a pretty stable year in our financial services practice,” O’Neill says. “We bolstered the bench with some up and coming talent but all the key players we brought in over the last two or three years are very much still here and well established in the firm. The search industry in general in Asia had a very good year.”
One banker says: “Max, Stephen, John, Christian: they’re still the recruiters who dominate in top firms doing senior level work.” He is referring to Max Lummis at Executive Access, Stephen McAlinden at Heidrick, John Wright and Christian Brun.
Looking ahead, recruitment specialists expect more of the same: steady hiring across the board, more momentum in private banking, a heavy concentration on hires in China and India, and continuing hiring appetite among Asian regional players. For an industry so recently emerged from a once-in-a-century financial crisis, it is tempting to conclude that nothing much has changed.