China: Foreign talent - Local banks

Written by Zennon Kapron || 20 Apr 2009

Prior to joining the WTO, the knowledge and experience of bank staff in Chinese banks was not an issue. Most domestic banks were very inwardly focused on their core domestic business and staff had the capabilities to match. However, as more and more SOEs were either listed or entered into partnerships with foreign multi-nationals, the requirements of domestic companies changed and expanded. No longer was it a case of simply domestic business - China had gone global. The issue then became staff experience and capabilities and as most Chinese banks didn't have the experience in-house, so they looked west.

Foreign talent primarily came from tie-ups between domestic and foreign banks. China's entry into the WTO meant that foreign banks could start to take stakes in domestic Chinese banks and the lure of 1+ billion customers meant that nearly every foreign bank had some sort of China strategy. So with the domestic banks looking for experience and the foreign banks looking for a piece of the pie, it looked like a good match.

We have talked at length before about whether these partnerships were successful or not - financially they tended to be, as we saw with RBS, but most foreign banks have very little else to show from the relationships which tended to be very one sided. One private wealth strategy director that we spoke to said that their Chinese partner had taken the expertise and advice from the foreign bank, but provided little in return; the foreign bank didn't even have access to a client list, much less actually receive any revenue from the domestic company's wealth management business.

The partnerships brought an influx of incredibly capable bankers into mainland China from abroad. A posting in HK was once seen as a way to side-line underperforming senior staff, but now a stop in HK/China is a necessity for any fast-track banker. Still, although many are coming to the mainland, there are very few in key positions within the market as most foreign banks are very limited in their scope of operation; many are 'Chief China Representatives' in responsibility if not as well in title.

Some foreigners have found work in domestic banks, but it's something that is rare. A recruiter we spoke to said that a candidate for a role in a domestic bank needs to have nearly perfect Chinese language skills to be able to find and secure a position. Even then, the job isn't assured as banks are often looking for a local face and an already established network of local relationships, which is key for doing business and, generally, very difficult for foreigners to cultivate.

Openness to change within domestic organizations is also a challenge. One banker we spoke to, who is one of the only foreigners in a large domestic financial institution, says he still faces incredible resistance when trying to start or implement any new projects and has to go through a decision making/influencing process which is much more convoluted than he would face in a foreign bank. Often management's attitude to new initiatives is 'if it isn't broken and hasn't broken, why should we change it?' This becomes especially worrying in the context of risk management where conventional wisdom is that an ounce of prevention is worth a pound of cure.

What happens next remains to be seen. Although the downturn has greatly increased the number of financial professionals on the job market and there have been stories of domestic banks picking up foreign talent on the cheap, many of the aforementioned challenges remain. Recruitment of foreign banking professionals in Chinese banks will continue, but don't expect to find a German behind the counter at your local Bank of China branch anytime soon.

 

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