Change paves way for opportunity

PUBLISHED : Friday, 30 March, 2007, 12:00am
UPDATED : Friday, 30 March, 2007, 12:00am

A slew of regulatory changes and a boom in Hong Kong's banking and finance sector have created intense competition among financial institutions to hire staff, according to local bankers and industry watchers.

At the top of the list are the BaselII regulations on capital adequacy requirements for banks, which have fuelled a demand in the market for those with risk management and corporate governance backgrounds, and the United States Sarbanes-Oxley Act.

Another factor driving recruitment in the sector is the introduction of weekend banking which, even with adjusted rosters, has increased hiring.

And a third factor is the rapid growth of private banking. The overall rate of expansion is about 30 per cent a year, meaning that headcounts are doubling over a two to three-year period.

Changes in regulations also mean there is new potential for growth in the mainland.

At the same time, though, there has been a steady rise in operating costs - mainly in wages and rent - and HSBC has already taken 'very stringent measures' to rearrange work procedures and outsource certain services, according to executive director Peter Wong Tung-shun.

This has made it possible to enhance cost efficiency, while also helping to expand the business.

Mr Wong said most banks would be likely to engage in more lending this year, especially for personal loans.

He expected the pace of new stock market listings to continue and, on the retail side, predicted the introduction of more equity-linked products.

In broader terms, he recommended that Hong Kong take a more proactive approach towards integration with the mainland's financial system.

It also made sense to look at new ways to attract Asian companies to list in Hong Kong, and to develop active markets for trading commodities and bonds. Against this background, he said it was no surprise that overall employment prospects in the banking sector were good.

'The job market is set to remain buoyant, barring unforeseen shocks,' Mr Wong said.

'For the job seeker, there will be lots of opportunities.'

In particular, there is consistent demand for frontline staff licensed to sell insurance and investment products, credit and relationship managers in commercial banking operations, and specialists in IT and treasury systems.

This is creating intense competition between financial institutions and insurance companies, all keen to hire and retain the best staff.

'Increasingly, the lack of talent is a major concern,' Mr Wong said. '[Employers] will need to be very competitive with their offers and have retention programmes in place to avoid rising employee turnover.'

Shera Lee Yee-cheung, senior vice-president and head of consumer banking for Fubon Bank (Hong Kong), said one of the major issues would be finding ways to work more closely with the mainland. Doing so would help to maintain Hong Kong's dominant role as a financial gateway both for foreign investors looking to expand in China and mainland businesses establishing a more international presence.

'There were new regulations in late 2006 on how foreign-funded banks can operate in China,' Ms Lee said. 'So we can now become 'local' banks in the eyes of mainland citizens, and handle retail business and [mainland currency]-denominated lending.'

In parallel with this, she noted that banking services would continue to evolve. For example, with the growth of online banking and card transactions, the scale and extent of branch networks would be kept under close review. And, since the majority of retail banks generated about 80 per cent of their income from their wealthier clients, branches were expected to focus more on offering tailor-made advisory services.

'The boundary between retail banks and private banks is becoming lower, and there is now some sort of overlap in the customer segments they would like to acquire,' Ms Lee said.

She said since Hong Kong was considered a mature market in terms of advisory services, some form of skill transfer would inevitably be needed to build up business on the mainland.

'Hong Kong has the experience, talent and exposure to help the mainland banking sector and share information on corporate governance, sophisticated regulations, and maintaining sound financial conditions.'

She said there was also a lot of potential to work with corporate investors. Just like individuals, companies would need expert assistance in 'parking' surplus funds and protecting their wealth. Company treasurers or financial controllers required expert advice and could benefit considerably from being able to tap into diversified services offering loan facilities, structured products, and investment returns to meet their needs.

Consequently, Fubon Bank, like other major institutions, would be gearing up throughout the year to cope with the full range of these changing requirements and to cover a wider geographical area.

Despite the continual trend for financial institutions to outsource to keep costs down, hiring is actually on the increase, according to Keith Pogson, partner, global financial services, Ernst & Young.

'Most people think of areas such as IT being outsourced, but in reality it's an extremely wide range of functions,' Mr Pogson said.

It could now include everything from handling accounts payable or completing regulatory returns to doing complex investment analysis or preparing trading spreadsheets for front-office sales teams, he said.

'You might expect some downturn in headcount because of outsourcing,' Mr Pogson said. 'But around town the headcount is increasing.'

He said in view of the need to increase the pool of experienced bankers, employers had to tap into new sources of talent. Because it was not always possible to poach from local competitors, many institutions were recruiting or relocating staff from overseas, and using a certain amount of lateral thinking.

For example, wealth management divisions were now hiring more people directly from the real estate sector. Such candidates were more than likely to have two of the most important qualifications: a good contact list and experience of selling to well-off customers.

'The concept is exactly right,' Mr Pogson said. 'It's a matter of looking where you can to find the right skill sets.'

He added that the growth of investment banking and the setting up of hedge funds in the Asia-Pacific region was also having a significant impact. 'There is a huge demand both for traders who know how to buy and sell on screen and for back-office staff to support them,' he said.

One of the big unknowns is the extent to which Chinese institutions will continue to hire 'foreigners' to help upgrade their operations to international standards. Clearly, experienced Hong Kong bankers fall into this category. Therefore, they will continue to be highly sought after for their industry knowledge, language skills and cultural adaptability.

'You won't see a slowing of the vortex in Hong Kong,' Mr Pogson said. 'For example, if XYZ organisation is opening in Beijing, they may have a trilingual guy in Hong Kong, who is the only one in the company with the experience and ability to do the job. They know it is easier to move him and, if necessary, to 'backfill' into Hong Kong from Singapore or Japan.'

Gigi Chow, Ernst & Young's director of recruitment, said candidates in Hong Kong and China still saw the need to have overseas experience.

'It is perceived as a valuable thing to do, even though the expatriate pay differential is disappearing,' Ms Chow said.

She added that a recent survey conducted by the firm had revealed one resonant theme among leading financial employers.

More than 80 per cent of respondents said they were planning to increase their teams in the next two years, explaining why their major concern was to get the right people and skills in place to enable them to focus on business development.

Her impression from talking to students was that they realised the financial services sector was 'an exciting place to be'.

However, that perception was partly coloured by their expectations of receiving attractive compensation packages.

Taken from Make the Right Move in Banking & Finance, by Rachel Autherson and John Cremer