Foreign Banks Expanding in China
Foreign investment banks are pushing to expand their operations in China. Since China opened its banking sector to foreign banks back in 2006, overseas lenders have jumped in to compete with domestic banks for the high-end consumer banking business. By 2010, foreign bank assets are predicted to double, totaling more than $100 billion, according to a survey conducted by PricewaterhouseCoopers (PwC). But the survey also finds that as banks attempt to boost their ranks and secure a piece of the Chinese market, finding and retaining talent remains a challenge.
Executive recruiting firm, A.E. Feldman says that growth in China is creating finance jobs and driving demand for candidates with wealth management and private banking experience. The increase in overseas investment and cross-border deals is also adding attorney jobs for professionals with structured finance and capital markets experience.
The performance of foreign banks in China has climbed steadily since 2005. The majority of the banks surveyed by PwC predict annual revenue growth rates of at least 20% until 2010. Assets are expected to double, reaching more than $100 billion by 2010.
Demand for Talent Grows
Foreign banks that are expanding into China are facing a talent shortage, according to PwC. The firm’s survey shows that foreign banks in the region are expected to increase their ranks by a staggering 113%. Despite those optimistic expansion plans, nearly all the banks surveyed say they are experiencing staffing shortages.
“Many foreign banks are already supporting their expansion in China by importing trained personnel from within their banks,” said Raymond Yung, PwC’s Financial Services Leader for China. As of May 2007 there were already about 3000 expatriates working in the industry. The banks surveyed by PwC plan to hire 639 more professionals by 2010.
Banks are in need of experienced professionals to work in a sector that not only stresses innovation but also risk management and control, according to China Daily. The report quotes Paula Ko, Head of HR at Standard Chartered Bank (China) Ltd., as saying, “There is an escalating need for staff… The demand is so fast and huge, and happens across the country.” Standard Chartered Bank doubled its China staff from about 2,000 in 2006 to its current 4,000.
Banks Expanding
JPMorgan Chase is stepping up expansion in China. The bank recently named Elaine La Roche as Vice Chairman of its China Operations, according to Bloomberg. La Roche will help JPMorgan accelerate expansion in China, broaden the bank’s revenue sources and build relationships with the government and clients, says Bloomberg citing an internal memo.
Gaby Abdelnour, Chairman and Chief Executive of JP Morgan’s Asia Pacific business, said La Roche’s hire would help the bank “deepen” its involvement in China and would help it improve its relationships with the Chinese government and businesses in the country.
Last year, JPMorgan became the first foreign company approved to set up a locally incorporated bank in Beijing. China removed all geographic and business restrictions on overseas banks in line with its WTO commitments. As of December 2006, overseas banks operating in China must incorporate locally to offer the same services as local banks, such as wealth management, mortgage loans and credit cards.
The move towards local incorporation is the most important change taking place in China, according to PwC. The survey finds that the impact of this move to incorporation is expected to have far-reaching implications for foreign banks, particularly in the areas of increased capital requirements, wider supervision, greater transparency and new product opportunities. Other locally incorporated banks include, Citibank, HSBC, Standard Chattered Bank and ABN Amro. The PwC survey also shows that a large majority of respondents predict 20 to 30 banks will incorporate locally by 2010.
Over the next three years, the respondents’ most important new retail products are expected to be credit cards, investment products and mortgages; the three most important new wholesale products are RMB denominated interest rate and currency swaps, structured products and debt capital markets.
SWF’s
Foreign investment banks and fund managers are also targeting China’s main sovereign wealth fund – the $200 billion China Investment Corporation (CIC). Analysts predict the massive new investment vehicles may triple in size to $729 billion by 2010.
