Chinese Bankers Flock to Hong Kong

A flood of Chinese bankers is changing the social fabric of Hong Kong, as they rapidly expand their footprint in one of the world’s premier financial centers, even as Beijing struggles to tame the former British colony politically.

Twenty years after Hong Kong’s handover to Chinese rule, scores of mainland professionals are filling the elite financial ranks of Hong Kong, while a series of lay-offs at western banks has led to an exodus of expatriates, Reuters reported.

The largest increase in mainland staff over the past decade has come in investment banks, with 80% seeing an increase of at least 20%, according to a 2015 Financial Services Development Council survey.

“It has a much better environment than Beijing where I used to work,” said Hong Hao, a managing director at BOCOM International, who has lived in Hong Kong for five years. “The food is good and the tax rate is also good.” Tax rates in Hong Kong are around 15-17%, while they can be as much as 45% in mainland China.

Chinese initial public offerings dominate the Hong Kong market, the world’s largest IPO market in 2016 when mainland offerings represented 80% of all new listings, according to Thomson Reuters data.

Hong Kong’s financial services industry accounts for 18% of the territory’s economy, compared with just 10.4% in 1997 when the city returned to Chinese rule.

 Easier to Recruit

The new expat environment is making it easier to recruit talent. Several Chinese brokerages, asset management firms, and a Big Four Chinese bank told Reuters in recent months they intend to expand and hire more people in Hong Kong.

“When I first joined the company 14 years ago, we could barely recruit the right people as we couldn’t offer a good salary,” said Chen Shuang, chief executive of China Everbright Ltd, the Hong Kong investment arm of state-owned China Everbright Group. “But now, it’s much easier to recruit top talent, even those from large Wall Street banks, which was unimaginable in the past.”

Some senior Chinese bankers, such as managing directors and department heads, now earn more than their western counterparts, which offer compensation of about $1 million a year, including base salary and cash bonus, according to executive recruiter Bernard Yeo of Bo Le Associates.

On the flip side, junior Chinese bankers are typically paid 20 to 30% less than their foreign counterparts and enjoy a less generous package that excludes housing, school fees and club memberships enjoyed by many western expats, Yeo said.

The changing demographics of the financial industry is reflected in the local economy.