GLOBAL TREND REPORT CORPORATE & INVESTMENT BANKING 2015 OUTLOOK

015 GLOBAL TREND REPORT CORPORATE & INVESTMENT BANKING 2015 | OUTLOOK A CHANGING LANDSCAPE IN CORPORATE & INVESTMENT BANKING Morgan McKinley is h...
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GLOBAL TREND REPORT CORPORATE & INVESTMENT BANKING

2015 | OUTLOOK

A CHANGING LANDSCAPE IN CORPORATE & INVESTMENT BANKING

Morgan McKinley is highly active in the Corporate and Investment Banking (CIB) recruitment market in the APAC region, with specialist desks in Shanghai, Hong Kong, Singapore and Tokyo. Overall the market has been more buoyant in the first half of 2015, although in Singapore, contrary to our expectations, cost-cutting has continued. Following a period of cost containment, in most banks in the region employees are expected to be more commercially focused and hands on. New starters are expected to get up to speed faster than ever. Potential candidates are also often reluctant to move out of a secure position as the banking sector has not completely shaken off the legacy of the recent past.

QUICK LINKS MAINLAND CHINA................................ 2 HONG KONG.......................................... 3 JAPAN........................................................ 5 SINGAPORE............................................. 6

• There are more and more opportunities opening up in both Corporate and Investment Banking sectors in Mainland China • There is a shortage of talented and experienced candidates with the required language skills in Hong Kong • Recruitment in Japan is focused on junior to mid-level candidates though banks are still cautious about increasing headcount • Some leading global banks have made deep cuts to front office teams, in Singapore in particular

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Candidates will need to be more hands on as there is less team support from an operations and credit risk perspective.

MAINLAND CHINA

A POSITIVE OUTLOOK BUT TOP LOCAL CANDIDATES RELUCTANT TO MOVE We have seen a growth in opportunities in both the Corporate and Investment Banking sectors in China. Chinese banks are attracting more and more candidates from Hong Kong and Singapore who are looking to develop their careers on the mainland. Banks are strongly recruiting relationship managers and structured commodity finance specialists in Corporate Banking and M&A, debt capital markets and IBD sector coverage teams in the Investment Banking space. Client sectors (i.e. the banks’ clients) that are driving demand in China include technology, media and telecommunications, financial institutions, pharmaceuticals, natural resources, and power and utilities.

finance and structured commodity finance teams,” reports Rio Goh, Operations Director & China Country Head, Morgan McKinley.

“Although the commodities market has been challenging in recent times, many corporate banks are looking to strengthen their trade commodity

Hiring organisations are typically keen to see clear evidence that a candidate has led or closed a deal or has made a significant contribution to

Chinese banks are putting more demands on their staff and we have seen some consolidation of functions. Hiring processes are often lengthy. “Candidates who are looking for a better deal with a new employer should bear in mind that the employer is likely to demand more from them in terms of results and performance. They will also need to be more hands on as there is less team support from an operations and credit risk perspective,” Goh says.

the outcome of a successful deal. However, it is often very difficult to entice the best potential candidates to move.

SALARIES & BENEFITS Those staying in their current role can probably expect an annual salary increment in the order of 5-10%; those moving between organisations 20-30%. There has been little change in the structure of performance bonuses and performance benefits.

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If the chemistry is right, and you believe the opportunity is correct, you should follow your instinct.

HONG KONG

TALENT SHORTAGE There is a shortage of talented professionals who combine experience of the banking sector with the right language skills in Hong Kong at present, and we expect this to intensify as China continues to develop. In the Corporate Banking sector we have seen a sustained increase in demand for relationship managers, project finance and structured asset finance professionals. We expect export finance to drive further demand in the second half of 2015. In Investment Banking, financial institutions are cautiously adding to their M&A, sector and capital markets teams, although deal flow and hiring trends vary by team. Equity sales, trading and research have been buoyed by bull markets either side of Shanghai Connect, but primary markets activity has been impacted by unstable

natural resources prices and the Chinese leadership’s anti-corruption programme. Client sectors that are driving particularly strong demand include technology, media and telecommunications (TMT), financial institutions, general industrial, property and pharmaceuticals. Most of this growth in recruitment is focused at the mid-manager level and where banks have difficulty sourcing local talent; many will look to North America for Chinese and Hong Kong nationals or other candidates with the required language skills. By contrast at the junior level the market is highly competitive and it is therefore difficult for starters to secure roles where they will acquire the necessary skills.

While there is an overall imbalance of demand over supply, and therefore many opportunities at the mid-manager level, it is important for Corporate and Investment Banking professionals to consider where they want to be in a few years. The perfect role may be difficult to find. “Candidates need to take a holistic view when looking to move firms, and seek guidance from a variety of sources while taking into account any bias in their views. This also applies to advice that you receive from recruitment agencies,” says Adam Jeffes, Manager, Global Banking & Markets at Morgan McKinley Hong Kong.

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HONG KONG

“Fundamentally, the banking industry is about people, so if the chemistry is right, and you believe the opportunity is correct, you should follow your instinct. We had an example this year of a candidate who ruled out an opportunity to join another firm in a sector team simply because he was reluctant to specialise. Our advice was that he should take the position, because it would give him the opportunity to transition to a strong platform, with good long term career prospects, and he had a narrow window to make the switch. Having continued his job search for several more months without success, he conceded that it was a missed opportunity,” Jeffes recalls.

SALARIES & BENEFITS Base salaries have clearly increased significantly at the junior level amongst bulge bracket firms over the past 18 months, which is somewhat surprising given the uncertainty in China. That said, we anticipate that levels of compensation will be largely flat for those staying in their current roles, notwithstanding increments for progressing through the analyst/associate path. This increase in salary is likely to put pressure on second tier houses in their attempts to retain

their best talent. Those who succeed in moving from a second tier to a first tier organisation can expect a significant increase in salary. Deferred PRP has become the norm for bonuses and the battleground is in the percentage of bonus that is non-deferred – banks are well informed on the changing dynamics at their competitors and will respond accordingly.

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Hiring organisations are fishing in a relatively small talent pool.

JAPAN

JOB VOLUME INCREASING While banks remain understandably cautious about taking on additional headcount, the job volume is increasing, especially in the Corporate Banking sector for junior and mid-level roles. The Japanese economy is moving in the right direction, even if there is some volatility, and hiring organisations are cautiously optimistic, with the general industrials, pharmaceuticals, gaming and lodging sectors especially positive. Relationship management, trade finance and cash management are hot areas in corporate banking and fixed income sales and trading specialists are in strong demand in the Investment Banking sector. “We expect the demand for relationship managers to remain high throughout 2015,” says Yoshiki Kumazawa, Manager, Banking & Financial Services at Morgan McKinley Tokyo. “Hiring organisations may struggle to find the ideal candidates for a number of reasons,”

Kumazawa says. “Banking professionals are rather risk-averse post-Lehman and global clients sometimes have difficulty convincing candidates to move from domestic Japanese banks without offering a guaranteed bonus. Language skills, including native-level Japanese, and experience of the Japanese banking environment are requirements, so hiring organisations are fishing in a relatively small talent pool, though they may look to candidates from other APAC locations if necessary.” Candidates who are flexible can often find good opportunities at mid-manager level. For example, a background in trading may be transferable to other roles such as sales and research, and M&A experience may be useful for investment banking coverage and private equity. “However, they should be aware that there is an increasing expectation that they come up to speed in a very short time,” Kumazawa says. From mid to senior

level the opportunities are scarcer, especially in IBD, and there is currently only a limited number of positions being posted for entry-level sales and trading specialists.

SALARIES & BENEFITS Those staying in their current role can expect pay increments in the range 0-10%; those moving between organisations 10-20%. Increasingly, global investment banks pay bonuses in stock options, which can be in the 30-50% range for Vice Presidents or other senior roles.

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Generally speaking, deal experience is the key to getting ahead.

SINGAPORE

FURTHER COST-CUTTING The number of front office cuts that have taken place in the Investment Banking sector in Singapore has surprised us, especially given the scale of redundancies that have already occurred over the past five years. Banks like Macquarie and Goldman’s have made very deep cuts, taking the market by surprise. “Most banks are holding off on hires as they are focused on cost cutting. Private equity hires remain broadly constant, but the volumes are low. Headcount is only being approved for some replacement hires among the banks’ front office teams,” says Jay Abeyasinghe, Manager, Banking & Financial Services at Morgan McKinley Singapore. In addition, banks will hire where they need to fill compliance and regulatory roles but regulatory pressures and declining returns on equity are having a strong knock-on effect. Where there is some modest growth in employment it is focused in the Corporate Banking sector on entry-level and mid-manager roles such as relationship manager, structured commodity

finance and leveraged and acquisition finance; in the Investment Banking sector, there is some demand for M&A and IBD sector team specialists. Financial institutions, property, power and utilities and infrastructure are the client sectors driving most demand. “Despite the sluggish state of the recruitment market some banks are struggling to find suitable locally based talent for roles in investment banking, as many people are leaving banking entirely, so hiring organisations are open to considering overseas candidates, in particular from Malaysia, Hong Kong and the United Kingdom,” Abeyasinghe says. He offers the following advice to professionals in this sector: “If you are in investment banking, it’s important to try and accumulate as much M&A deal experience as possible. Generally speaking, deal experience is the key to getting ahead and M&A is the most sought-after product

experience among our clients. The second most sought-after experience is structured, leveraged and acquisition debt. Also, bankers have to think more commercially, with even Vice President-level bankers having to focus on deal origination. In a hyper-competitive banking market, origination and relationships have become more important than ever.”

SALARIES & BENEFITS Salaries will remain basically flat for those professionals who stay in their current position. Those making a lateral move can expect a pay increment in the order of 1015%. We have noticed in recent years that bonuses have become more cash-heavy with a smaller share component, but overall the trend has been for smaller bonuses.

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THE LIGHTER SIDE OF MARKETING RECRUITMENT Here’s a selection of odd events and encounters experienced by our consultants

A POSITIVE REVERSAL OF FORTUNES I once had two candidates interviewing for the same role. Once the final rounds were complete, on the Friday I caught up with both candidates and the client. The client had decided to rule out one candidate and pursue the other; however, that candidate had informed me that she was no longer interested in the role. Rather than rejecting one candidate and informing the client that the other was unwilling to join, I decided to call it a day, head for a drink and put off worrying about the difficult calls I’d need to make the next week. But when I arrived back at work on the Monday morning I heard first, that the client had decided that it wanted to hire both candidates, and second, that the candidate who was not keen on Friday had thought it through over the weekend and decided she would join after all. So I placed both. If only every week could start that way!

AN EXCEPTIONALLY LENGTHY HIRING PROCESS In Tokyo it took us six months from receiving a verbal offer from a global corporate bank to getting the formal letter detailing the offer. We had to meet the candidate almost every week to keep him warm.

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GLOBAL TREND REPORT CORPORATE & INVESTMENT BANKING

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