Juniors feel pain of Hong Kong banks' 'transition'
Big names are recruited for their China contacts while lesser lights are discarded as big institutions find themselves at a strategic crossroads
This is the season of hiring and firing in Hong Kong's financial community.
Hundreds of junior-level jobs have been axed at several major international banks in the city so far this year. But it's a different story when it comes to top positions.
The past week was marked by some big names changing chairs.
Margaret Ren, a daughter-in-law of former Chinese premier Zhao Ziyang, was wooed away from BNP Paribas to become the top China boss at Bank of America Merrill Lynch, based in Hong Kong. Sherry Liu, former China chairwoman and chief executive at Royal Bank of Scotland, was tapped to join the Hong Kong office of New York investment bank Jefferies & Co. And BNP Paribas filled several senior regional positions in its wealth management division.
When the news of Ren's new job hit the streets, I happened to be in a coffee shop in the city's financial district, where I couldn't help overhearing several people chatting about her and her new employer.
"Why is the bank laying off dozens of junior jobs while adding senior people like Ren?" asked one diner, adding that what Bank of America Merrill Lynch was shelling out for Ren's services could save a lot of junior staff their jobs.
I ran this idea past my contacts at BNP Paribas, which elicited smiles all around because they had been thinking the same thing and had heard their colleagues around the French bank express similar thoughts.
But I can understand why such decisions are made, and they aren't unique to the finance industry.
Big names in any industry get big pay for bringing influence and connections - and landing more business.
When my colleagues and I wrote about lay-offs at banks recently, the banks told us the cuts were mostly related to an individual's work performance, or part of "housekeeping" efforts to shed businesses that could not make money in the present market environment.
If the truth be told, such housekeeping often takes place near the end of a year so banks avoid paying annual bonuses and other benefits and preserve their bottom lines.
One of my friends, who was laid off recently, complained to me with a view that seems common among many relatively junior financial workers.
"When the market is bad, you get blamed and you lose your job because your employer says the product you are selling is not attractive enough to make money for the firm," my friend said.
"When the market is good, I think everybody is happy, and you are treated like a star when your product is a bestseller. Is this what many companies consider to be the relationship between employees and employers? What about loyalty?"
Some industry insiders say the reason banks are grabbing senior people while laying off juniors is because many of those institutions are at a crossroads regarding their business strategy and direction.
Connections are extremely important in China and landing even one big deal can make a big difference in a bank's yearly earnings.
Times are tough and tough choices are being made.
George Chen is the Post's financial services editor. Mr. Shangkong appears every Monday in the print version of the SCMP. Like it? Visit facebook.com/mrshangkong