Goldman Sachs

Finding new ways to stay afloat

High-flying executives are increasingly leaving finance and moving to more stable industries

PUBLISHED : Monday, 26 August, 2013, 12:00am
UPDATED : Monday, 26 August, 2013, 6:58am

Some of the top investment bankers in Hong Kong have chosen to leave a high-flying career in the financial industry and return to more traditional businesses, such as real estate and trade, fuelling doubts about the attractiveness of investment banking jobs in the future.

Most major international banks have embarked on internal restructuring - in some cases just to survive amid fierce competition - since the 2008 global financial crisis, which changed the landscape of the industry.

Human resources consultants say many investment bankers are increasingly concerned about their job security, regulatory uncertainties in the financial industry worldwide, and fiercer competition for deals, which often results in lower fees. They also have concerns about worsening office politics and confusing internal restructuring, often following a change in leadership.

Such concerns have encouraged some investment bankers to consider job opportunities in sectors more stable than their relatively young current business, the consultants say.

Yip Chai Tuck, 39, a former managing director at Goldman Sachs in charge of mergers and acquisitions in China, became chief executive of Hong Kong-listed Lai Sun Garment, the flagship of Lai Sun Group, last Monday.

Lai Sun used to engage in garment manufacturing and distribution. It later diversified into property development and investment in Hong Kong and on the mainland.

During Yip's eight years at Goldman, he led several important deals, such as the privatisation of well-known mainland hotpot restaurant chain Little Sheep, now a unit of US fast-food giant Yum Brands. Prior to Goldman, Yip worked for PCCW, Hong Kong's leading telecommunications service provider, as a vice-president.

The trend of such moves out of Hong Kong's financial services industry is "obvious", said Robert Grandy, managing director for Asia-Pacific financial services at consultancy Korn/Ferry.

"Some bankers and analysts decided to make a change into industrial and corporate [jobs], as the global investment banks are still undergoing restructuring," Grandy said.

Yip's move followed two other high-profile appointments last year - at Alibaba Group, the mainland's top e-commerce firm, and Hong Kong-headquartered Li & Fung, the world's largest supplier of clothes and toys to retailers.

Late last year, Alibaba appointed veteran investment banker Michael Yao, who was co-head of Rothschild in Hong Kong, to head its corporate finance team.

At about the same time, Ed Lam, head of the corporate and investment banking unit of Citigroup in Hong Kong, joined Li & Fung as its chief financial officer.

According to Lai Sun's filing with the Hong Kong stock exchange, as chief executive Yip will receive annual remuneration of HK$7.8 million and such other compensation as may be determined by the board, with reference to the performance of the CEO and the firm, profits on new investments, his duties and responsibilities and the prevailing market conditions.

Before the 2008 financial crisis, senior executives at major investment banks at the managing director and executive director levels could typically earn more than HK$10 million a year.

In recent years, a newly promoted managing director at a major bank may get a base income of about HK$4 million a year.

Big bonuses, which were common in years gone by in the investment banking business, can no longer be counted on, thanks to a dearth of deals in weak capital markets around the world and the slow economic recovery in the West.

"I think when individuals look ahead at the next five years of their career, an investment bank presents a number of risks and concerns," said Matthew Bennett, a regional managing director at recruitment firm Robert Walters. "Naturally, I think, a number [of them] seek to look at where else they can employ their skills."