May 24, 2024

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Redundant Hong Kong Investment Bankers Face Tough Market

5 min read

Hiring confidence across the city’s wider financial services sector is currently mired in deep-seated pessimism.

Hong Kong’s financial services sector is undergoing the toughest hiring market seen since at least the 2008 global financial crisis, with a further wave of redundancies and job cuts expected in the middle of this year, several recruiters indicated to finews.asia.

As it is a market highly dependent on mainland transactions and IPO deals, the city’s job losses stretch back as far as 2021, in tandem with China’s slowing economy.

«The market has been quite depressed in the past 18 months,» John Mullally, managing director at Robert Walters in Hong Kong told finews.asia. «Obviously the level of economic activity and the degree of market confidence in China greatly affects investment banking activity in Hong Kong.»

Falling Revenues

Investment banking jobs have been the most exposed because of cost concerns and as banks have not been able to meet revenue numbers, something that has consequently affected hiring, according to Mullally. Another factor that is not helping matters is the significant number of hires made in 2021 and 2022.

“In many respects, banks were overstaffed. They staffed up to a level that supported the amount of activity that was coming through in 2021, but by 2022 it was obvious that those revenue amounts and the level of market activity weren’t coming in. They couldn’t support the number of employees they had. By the time the market downturn came in the middle of 2022, they were overstaffed and had to make changes to the number of people they employed. It hasn’t got any better,” he said.

Further Job Cuts

Massive job cuts have taken place in the past year, particularly among senior ranks, or those at the director, executive director, and managing director levels. Further job cuts are expected over the next few months and they will continue until the middle of this year but they will be selective, Mullally maintained.

«Banks will reevaluate where they are at major points in the year. They will be looking at revenue numbers and that will determine their decisions,» he added.

While hiring on the buy-side looks better in comparison to the sell side, in general, it is a fairly depressed hiring market across most areas, Mullally said.

Hardest Hit

It has become very difficult for a senior investment banker who has been made redundant to get back to a similar role as there aren’t many in the market at present, Mullally said.

«It’s a tough market. There’s are some opportunities out there and a certain degree of hiring. But business is very slow. Recruitment processes are taking a long time. Costs are really a central concern of all banks,» he added.

Candidates who are not very good typically take one to two years to find another job, according to Hayley Law, associate director at Michael Page in Hong Kong.

Agile Mindset

Still, with that being said, very good candidates could be offered up to two to three jobs, Law said.

«The job market these days needs people with an agile mindset, good stakeholder management skills i.e., being able to read the room and navigate various situations, and with an international mind and exposure. Only then will they be able to get a job,» she added.

It has also become increasingly difficult to convince employers to hire experienced investment bankers who previously drew an annual salary between HK$2 million to HK$6 million in total compensation.

«Employers these days prefer to hire candidates at HK$1.2 million in annual salary, although some were offered HK$1.5 million to HKS$1.8 million in the event that they were offered the job,» Hayley said. «Employers prefer to hire candidates who are progressing in their career instead of hiring candidates who are overqualified.»

Mullally, however, noted that investment bankers who were able to move to another job did it without any increment.

«5 percent to 10 percent if they are lucky. Otherwise, it is flat,» he added. 

Prove Yourself

It does not help that the market is now saturated with experienced investment bankers who are overqualified for many of the openings these days. These experienced investment bankers have to prove that they can settle into their new roles, and remain committed despite smaller paychecks, Law said.

«The market is evolving. What is more important is to have an agile mindset and the ability to originate business transactions,» she added.

Ability to Originate

The ability to originate transactions, rather than executing deals, is now key, Law pointed out. In particular, banks are now looking for investment bankers who can originate transactions outside of Hong Kong – namely Australia, India, Japan, and South Korea, as well as other Southeast Asian countries and the Middle East.

«Some investment bankers were getting mega paychecks before but they were just executing deals. But the market is different these days. We don’t need executionists. For such roles, we can hire junior people. But if you are a senior banker, you must have the ability to originate deals and be a rainmaker,» she said.

International mindset

A deal-maker would be someone who is not just focused on China. To be successful in Hong Kong, investment bankers these days must have an international mindset and be able to originate deals from different parts of the world, particularly in the Asia Pacific and the Middle East.

«A lot of investment bankers had their whole career focused on China deals in the past. If you do just Hong Kong or China deals, you won’t survive. I can hire a junior person to do that. That explains why some candidates were able to get two to three offers and why some are still jobless two years after they lost their jobs,» Law said.

Upskilling

Some of these candidates are at the director level but they failed to upskill themselves. Moreover, whether one can be a deal-maker depends to a large extent on their soft skills too, Law said.

«How can you navigate a conversation from a seemingly casual one to a meaningful one? Why does a tycoon or the Dubai prince want to do business with that bank? It’s because of the relationships. Soft skills include a lot of aspects including having an understanding of the cultural aspects of different countries, religions, what people eat, their hobbies, golf, and even Formula 1,» she added. «You can have a lot of meetings but there may not be any outcome.»

Private Banking

In comparison, hiring on the private banking front is more upbeat, although it is not nearly as active as it was two years ago, Mullally pointed out. However, he noted that there is always a degree of demand for private bankers if they can move clients and assets with them when they switch to another role in another bank.

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