UBS doing some big hiring in China – it plans to double its headcount there by adding 600 more staff in the next five years across investment banking, wealth management and asset management.
Some commentators have questioned the timing of the Swiss bank’s announcement, which comes amid mainland market volatility, an economic downturn and redundancies at other Western banks in Asia.
But there’s another potential barrier to UBS’s Chinese ambitions: finding enough people. UBS is expanding in specialist areas and recruiting enough mainland-based investment bankers and private bankers who can step straight into jobs at a global firm will not be easy.
Here’s how UBS could overcome Chinese skill shortages and get the talent it needs.
1. Bringing in senior stars
“Following the appointment of Eugene Qian as China head last year, UBS will relocate a few MDs from China and Taiwan into its Beijing office over the next two months in investment banking, sales/trading and private banking,” says Jason Tan, a partner at headhunters Being Associates in Shanghai. “This will create a ‘star effect’ – having these top senior people on board is likely to attract more talent by referrals and word of mouth, reducing the time and cost of recruitment. The potential downside is that if the star banker fails to light up the China operations there might be a mass exodus.”
2. Relocating the rank and file
UBS will also try to target less senior bankers in markets such as Taiwan, Hong Kong, Singapore and Malaysia, but China’s high tax rates can make it difficult to convince candidates to relocate. “Over the last five to 10 years banks have imported many people from Taiwan because they speak Mandarin and have skills from a mature banking market,” says Kenny Lam, group president of asset manager Noah Holdings. “Banks like UBS that are expanding will continue to do this, but just not to the same extent as before.”
3. Battling for top MBAs
“Over the next five years I see less reliance on Taiwanese candidates and more hiring of local mainland bankers with MBAs from the likes of Harvard and Stanford as the supply of these people increases,” says Lam. “They are the main target for many banks, so recruiting them is challenging. But if any foreign firm can get them, UBS can because it’s been in the market longer than most and has one of the most comprehensive product offerings.”
4. Targeting Chinese banks
“Top local securities firms such as Citic Securities, Haitong Securities and CICC have employees capable of developing products, conducting trend analysis and securitising assets. Large foreign banks like UBS could consider attracting more of their middle management people,” says Pathik Gupta, head of Asia Pacific at consultancy McLagan. The fact that UBS has a Chinese joint-venture licence for underwriting, and trading in both stocks and bonds – the only foreign bank aside from Goldman Sachs allowed to operate across all three lines – makes it especially attractive to candidates from local houses.
“Plus if you leave a local bank for UBS you get more money, do sexier work and there’s potentially the opportunity to move to Hong Kong in the future,” says ex-Merrill Lynch banker Rahul Sen, now a headhunter at The Omerta Group.
5. Focusing on foreign firms
Western rivals in China such as Citi, Deutsche Bank and HSBC are an obvious hunting ground for UBS, although their employee numbers in the country aren’t large enough to meet all of the Swiss firm’s hiring needs. “The major advantage of this recruitment channel is that professionals have both local banking expertise and a strong performance-driven mentality,” says Gupta. “Chinese firms’ culture is still intensely top-down and subordinate employees aren’t encouraged to take the initiative, which is very different from a Western performance-driven culture.”
6. Training up mass affluent bankers
While much of UBS’s new hiring will be in wealth management, the mainland does not have a large pool of purebred private bankers equipped to manage the complex business and family needs of Chinese millionaires and billionaires. The Swiss firm will therefore also hire mass-affluent bankers – from local and foreign firms alike – currently managing clients with assets under US$1m, says Sen. “They won’t initially have sophisticated private banking expertise, just basic equity and fixed income knowledge, so the first few months will be about training them in things like in asset allocation and risk profiling.”
7. Converting corporate bankers
UBS may on occasion need to think beyond more obvious candidate groups. Converting corporate bankers into private bankers is rare in Hong Kong and Singapore, but it happens more often in China, says Sen. “If in Hong Kong a corporate banker says to his client ‘move your private wealth to me at UBS’, he might say no because he probably already has a private bank. But that’s less like to happen in China where entrepreneurs may not have an existing wealth manger so may be attracted to a global brand like UBS,” explains Sen. “Sales people from outside the finance sector – luxury goods, commodities and real estate, for example – who have connections with wealthy individuals might also be considered by UBS. The risk for UBS that they don’t work out is lower in China because compensation is lower than in Hong Kong and Singapore.”
UBS would not comment on its recruitment plans.
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