Investment banking tradition requires the disgruntled deal doer to wait for their bonus to land in their bank account before quitting. About 20 bankers reportedly left Nomura after payouts in May, adding to the tally of exits in Asian financial centres. Options are growing for bankers in the region. They are shrinking for multinational banks.
An expanding cohort of wealthy Asian investors has combined with a tech boom to pump up listings and securities trading. In Asia, bankers can jump ship to fintech-obsessed tech conglomerates or ambitious mainland Chinese banks, as well as familiar bulge bracket names.
Recent departures have reportedly included two Nomura equity capital markets heads for Greater China and Asia ex-Japan and a couple of managing directors in debt capital markets at HSBC.
Pay is surging. Investment banks have raised base salaries in the region by about 30 per cent since the end of 2019.
Non-interest expenses at Nomura rose 13 per cent in the year to March as pay and benefits edged up 6 per cent. Banker pay accounted for 43 per cent of Nomura’s non-interest expenses.
HSBC costs rose in the first quarter, primarily due to performance-related pay and technology spending. HSBC chief financial officer Ewen Stevenson has said the lender may have to pay up as the year progresses and competition for bankers heats up.
Lenders such as Citigroup, which are setting up capital market operations in mainland China, are competing with local commercial lenders for staff. Cash-rich Asian conglomerates have joined the war for talent as they invest heavily in fintech. Equity compensation is an attractive part of the package thanks to stellar valuations for south-east Asian tech groups such as Grab and Gojek.
Investment banking is a relationship business. That truism applies with particular force in Asia, where big business is dominated by families rather than career administrators. Clients are particularly prone to follow bankers they know and trust out of the door
There is only one solution for banks in Asia — paying up to keep up with rivals. Investors can expect them to struggle mightily in the months and years to come to keep a lid on pay costs.
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