Mainland banks are increasing their share of underwriting initial public offerings, and particularly new share floats by cross-border companies seeking listings on the Hong Kong market.
The IPO business in Hong Kong has been dominated by United States and European investment banks, such as JP Morgan and Citigroup, but in more recent years the names of several mainland firms ,including China International Capital Corp (CICC) and BOC International (BOCI), have begun appearing more often on the lists of joint book-runners for big IPOs.
Beijing-based CICC is widely considered a market leader in the mainland's investment banking business, which has a short history in comparison with the US. CICC is run by Levin Zhu, son of former Chinese premier Zhu Rongji.
BOCI, based in Hong Kong, is the investment-banking arm of Bank of China, one of the mainland's Big Four state lenders. BOCI is run by Li Tong, daughter of propaganda chief and fifth-ranked official Li Changchun.
"The landscape of [investment banking industry] competition in Hong Kong has obviously changed since the 2008 global financial crisis, as some Western banks are leaving the business and some mainland firms are increasing their efforts to do more business," said a veteran investment banker.
"It is getting more and more obvious, because when you see the list of book-runners [for IPOs], you will see more and more Chinese names involved."
For example, more than a dozen investment banks have been engaged in tough competition in the past month for the IPO deal to be launched by Huishan Dairy early next year.
Huishan aims to raise about US$500 million from the IPO and the company is keen to assemble a team of banks with a more diversified background in the hope they can help it reach a wider group of potential investors.
Industry sources say BOCI and Citic Securities International, the Hong Kong unit of Citic Securities, the mainland's top brokerage, are likely to underwrite the deal, along with Western names such as Goldman Sachs and Deutsche Bank.
Part of the reason why mainland companies want to rely more on mainland investment banks to handle their IPOs is because many Western asset managers - potential investors in the deals who have good ties with Wall Street banks - are short of cash or have to allocate more financial resources to solve their problems at home rather than to put more focus on Hong Kong business.
Meanwhile, capital-rich state-owned enterprises that mainland investment banks are close to have become major investors in many IPOs that have been launched this year in Hong Kong.
"The state-controlled economic model creates layers of relationships or 'guanxi', which help the Chinese investment banks gain business or direct access to a market that remains difficult to break into for many first-timers," said an investment banker with a European firm in Hong Kong.
"The trend towards more involvement by Chinese banks can be clearly seen everywhere in the financial-services industry, which requires local skills and industry knowledge and in some cases is a very different operating environment from one familiar to bankers who sit in traditional financial centres such as Hong Kong and New York."
Meanwhile, as conditions have worsened this year, many companies that have succeeded in floating their shares on the Hong Kong market have had their "cornerstone investors" to thank. These are the investors who subscribe to between 40 per cent and 50 per cent of new offerings.
In better times, such investors may have been expected to take up just 20 per cent of an offer.
This explains why mainland banks are now more important than ever, as they can bring these cornerstone investors to the deals, partly because of their good political and business connections.
"Chinese investment banks are willing to take on additional risk and have closer relationships with listing candidates," said a US banker who has been involved in the business in Hong Kong for a decade.
"For example, some Chinese investment banks have agreed to bring in big-ticket orders from anchor investors , or have been willing to underwrite more shares in exchange for the 'book-runner' title - which helps boost their image and role when pitching for the next deal," he added.
More mainland investment banks are joining the competition.
China Merchants Securities, based in Shenzhen, is expanding its Hong Kong office by adding more IPO deal-makers and support staff. Other firms, such as Shanghai-based Haitong Securities, have beefed-up their business in Hong Kong through acquisitions of smaller rivals.