Mainland bankers in line for pay rises
At a time when bankers in Hong Kong and on Wall Street worry the weak global economic outlook will cost them their jobs, their counterparts in Shanghai and Beijing have something else on their minds - how big their raise is going to be.
According to the latest annual survey of foreign banks in China by global accounting firm PricewaterhouseCoopers (PwC), salaries for mainland-based staff at foreign banks are likely to continue to rise this year, mainly thanks to strong domestic commercial banking business.
Currently, a total of 181 foreign banks operate in China. Senior executives from 41 of those banks, including all the major players such as HSBC, Citigroup and Standard Chartered, participated in the survey, which was conducted in April and May.
More than half the participating banks forecast that pay rises for their mainland staff could be 8 to 10 per cent this year, far above inflation in the world's No 2 economy, currently running at 2.2 per cent.
All told, headcount is likely to increase at the 41 participating banks to 55,000 by 2015 from 35,000 at present, the survey shows.
Staff retention continues to be a problem, with 10 banks saying they expect to see more than 20 per cent staff turnover this year.
'Many multinational corporates are in a transitional period' on the mainland, said William Yung, a partner in charge of financial-services advisory business for China at the accounting firm. In particular, he said consumer goods companies were now focusing more on expanding their sales outlets on the mainland rather than just using China as a base to export from as they had previously. 'Such domestic business expansions require big capital', which, in turn, he said provided foreign banks with business opportunities.
According to official data released by the banking regulator on the mainland, foreign bank profits more than doubled to 16.7 billion yuan (HK$20.3 billion) in 2011 from 2010. The PwC survey attributed that surge mainly to international companies' demand for credit to expand their mainland businesses. And the fat profits were fanning expectations of salary increases, Yung said.
By comparison, the job situation in Hong Kong's financial industry appears more challenging. The South China Morning Post reported last week that between late June and early July, about 10 big financial institutions, including Germany's Deutsche Bank, Asia-focused brokerage CLSA and two big Swiss banks, Credit Suisse and UBS, have quietly laid off several dozen staff in total due mainly to weak activities in Western and Asian regional capital markets, excluding mainland China.
To many international banks, Hong Kong remains their regional headquarters while Shanghai and Beijing have become two most popular locations for their China head offices. The salary gap between Hong Kong and Shanghai and Beijing was still big, especially for junior staff, partly because of Hong Kong's high housing costs, bankers said.
Additional reporting by Angela Che
Profits at foreign banks operating in China stood at this much, in yuan, in 2011 - more than double earnings in the previous year