UBS’s top investment banker in Asia, David Chin, is currently spending plenty of his time thinking about recruitment. “About 15% to 20% of my day is typically focused on HR-related matters such as evaluating hiring – it’s an increasingly important part of my role as we expand in Asia,” says Chin, who heads up corporate client solutions (the investment bank) for APAC at UBS.
Chin is based in Hong Kong, but much of his attention is now taken up by UBS’s hiring plans for mainland China. Last November, the Swiss bank won regulatory approval to take a majority 51% stake in its UBS Securities joint venture in China, making it the first foreign bank to assume control under new rules announced by Beijing in 2017.
No longer shackled by China’s ownership curbs, which have long been a bugbear for overseas banks in the country, UBS now wants to increase its front-office workforce in China. “The major domestic investment banks are roughly eight to 10 times larger than us, so we need to grow. But we won’t be growing by 800% – it will be steady and selective,” says Chin, without providing headcount numbers or a timescale.
Chin says the recruitment will include bankers in important sectors such as technology, media, and telecommunications (TMT), financial institutions, and industrials. And the expansion will include UBS’s offices in Shanghai and Shenzhen as well as its local headquarters in Beijing.
Like other foreign banks with expansion ambitions in China – JP Morgan and Nomura, for example, received approval to set up majority-owned joint ventures in March – UBS may not find it entirely straightforward to hire the new investment bankers it needs. “For any bank, hiring onshore in China can be more challenging than in a mature market like Hong Kong,” says Chin. “We need to impose the same high standards as we do in other countries.”
UBS is looking at several potential ways to staff up its mainland front office. As in recent years, there will be Mandarin-speaking bankers in Hong Kong who will relocate to China, although this pool is limited because some people won’t want to move for personal and/or professional reasons, says Chin. “We’re also taking on people from other foreign firms in China, some of whom have told us that they’re frustrated by their bank’s progress there. But again, this isn’t the only answer, because everyone is trying to hire from each other in China,” says Chin.
UBS is also targeting people from private equity firms and Chinese investment banks. “If you’re coming from a local bank, the skills needed at UBS aren’t that different, but the set-up is. Bonuses at domestic firms are typically paid as a specific percentage of fees, for example,” says Chin. “It’s not impossible, however – we’ve even hired EDs and MDs from Chinese banks.”
No matter where they join from, Chin says UBS investment bankers covering China face a demanding set of challenges this year. “China is going through a new phase of growth. There was aggressive growth in 2017, but with a lot of debt to fund overseas acquisitions. Now there’s an economic slowdown, the imposition of capital controls, and trade tensions with the US,” says Chin.
UBS’s investment bank in Asia has experienced some recent temporary hiccups of its own, including a 12-month ban from sponsoring Hong Kong IPOs, and the loss of a role in a Chinese bond deal.
“Across the industry, the fee pool in Asian IB isn’t growing as fast as it used to. There’s margin pressure in ECM and DCM as Chinese firms get more aggressive with their fees,” says Chin. “That’s why UBS is prioritising areas where we can add value – cross-border deals, for example – and avoiding plain vanilla products.”
Chin says UBS appeals to candidates in China because it’s “more international than the domestic banks and more domestic than the international ones”. “Global companies wanting to grow in China often don’t have relationships with the Chinese banks, so they turn to us. For example, last year we helped Diageo increase its stake in Chinese drinks company Sichuan Shuijingfang,” says Chin. “And as Chinese companies become more international, they also need our support, because Chinese banks lack global networks.”
Meanwhile, UBS’s investment bankers are increasingly collaborating with their colleagues in the firm’s private bank, which is the largest in Asia. More of the region’s entrepreneurial millionaires and billionaires are demanding IB services for their businesses. “We’re getting even closer to wealth management so we can work with their private clients,” says Chin. “We can do their IPOs and debt for their companies. It’s a virtuous cycle.”
Image credit: balipadma, Getty
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