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Credit Suisse, UBS step up fight for China bankers in talent war

Shanghai

A BATTLE for financial talent is intensifying in China, one of the few places worldwide where global banks are firmly in hiring mode.

Credit Suisse Group this month hired a dozen analysts in China, almost half of whom used to work at UBS Group. UBS has scooped up more than 40 people from global and local firms. Morgan Stanley has moved a team to the mainland and hired about 20, but also saw six bankers walk out the door, some to local brokers. Along with Goldman Sachs, most foreign firms are seeking to double their headcounts over the next few years.

The hiring follows China's historic opening of its financial sector and stands in contrast to much of the world, with global banks announcing jobs cuts this year exceeding 63,000, on track for the deepest retrenchment since 2015. The industry's biggest players are betting there's billions to be made in China on everything from merger advice to stock underwriting and trading - if they can find the right people.

"There's definitely a talent war between some of the big global banks," said Sid Sibal, a Hong Kong-based regional director at recruitment firm Hudson. "In China, there's a finite amount of talent that one can poach from big investment banks, so they're going to have to think out of the box."

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Credit Suisse has hired top ranked analyst Alex Liu and Tracey-Ruth Sun from UBS to lead its research operations. Last year it snapped up UBS's then head of research, Erica Poon Werkun. The firm pushed out about 30 bankers at the joint venture in July to make room for fresh talent, a person familiar with the matter has said.

Beefing up research is becoming crucial as China opens its markets to lure more foreign inflows. Last year it scrapped limits on overseas purchases of stocks and bonds and eliminated approvals for quotas. Foreigners hold only 4.7 per cent of Chinese stocks in circulation, way below the more than 30 per cent in markets like Japan and South Korea, according to the China Securities Regulatory Commission.

UBS is also on the prowl. The Swiss bank has recruited about 200 people this year, including 44 bankers, analysts and support staff from at least five brokerages, including Credit Suisse, a spokesman said. UBS transferred managing director Grace Chen from Hong Kong to Beijing to head technology, media and telecommunications banking.

US behemoth Morgan Stanley has seen a churn of bankers. After previously flying executives in and out of Shanghai over the past years to right its money-losing joint venture it has now installed its own personnel in top positions. The firm this year moved seven executives to its China venture, in addition to hiring 20 bankers and research analysts, a person familiar with the matter said.

But it was also hit by departures, with some leaving for China International Capital, underscoring the difficulties that foreign banks face. Morgan Stanley lost six bankers at its China venture recently, including two executive directors and another banker who worked on its biggest deal this year, sources said. That was in part after it failed to pay bonuses to some executives and bankers but also due to lower deal flows, problems faced by its global rivals as well.

Analysts and bankers say that Chinese brokers offer a faster chance at advancing. While an analyst with three years' experience could become a sector chief at a local broker, it takes much longer to climb the ladder at a foreign firm, according to one executive who has worked for both. Stricter compliance at foreign banks is another hurdle. Local brokerages, for example, are allowed to co-invest in Star Market deals they handle, a potentially lucrative practice that is heavily scrutinised at foreign firms.

While it's still hard to compare compensation difference between local and foreign firms, in part because global banks are just getting started, the newcomers are offering at least a 20 per cent bump up to lure candidates for senior roles, said Eric Zhu, head of financial services recruitment at Morgan McKinley.

Some local firms are taking note and adjusting their compensation structure to be more in line with global practice by offering a greater part in fixed salary to graduates and junior hires, he said, but cautioned that recruiting in China is about more than just pay.

"Compensation isn't the most important factor," he said. "Foreign companies don't have much status here, you have to tell a very compelling story for people to be interested." BLOOMBERG

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