They’ve raised salaries and promised quicker promotions.
But the world’s biggest securities firms and banks are still struggling to retain junior investment bankers in Asia, challenging their expansion plans for a region that’s growing faster than almost anywhere else.
Recruiters and executives say the exodus is in some ways more difficult to stem than in New York and London, where analysts and associates have rebelled against the industry’s work-till-you-drop culture.
In Asia’s biggest hubs, young employees are more likely to leave because they think they can earn more — and climb the corporate ladder faster — at one of the many fintech and investment firms that have sprouted up to tap the region’s buoyant economies and swelling piles of wealth. The challenge is particularly acute in China and Hong Kong as foreign firms ramp up hiring to take advantage of a financial opening in Asia’s largest economy, competing with each other as well as the local startup scene.
“The whole industry is running into a pretty big supply and demand issue, and I don’t think this is going to be alleviated any time soon,” Mark Leung, JPMorgan Chase & Co.’s chief executive officer for China, said in a Bloomberg Television interview. The U.S. lender is among banks including Goldman Sachs Group Inc., Credit Suisse Group AG and HSBC Holdings Plc. hiring hundreds of staff for their push into China.
While it’s hard to quantify turnover with any certainty, an informal Bloomberg News poll of executives at four global securities firms found that anywhere between 13% to 15% of investment banking analysts and associates left their roles this year, roughly double the average in previous years. That’s in line with estimates for the U.S. and higher than the U.K., according to executives at recruiting firms.
Exits have picked up despite annual pay raises of 25% to 30% since 2019 for Hong Kong-based bankers covering in-demand sectors like technology and health care, said executives who oversee groups or the region, asking not to be named discussing private information. The increments have been more subdued for Southeast Asia where attrition is also rising, one of them said.
Jonathan Lam left HSBC Holdings Plc’s investment bank in Hong Kong in the middle of last year to join Butler, a home concierge company he helped start that offers personalized services ranging from housekeeping to fixing washing machines and hosting dinner parties. It was the feeling of making an impact and “owning something” that drove Lam to quit his debt capital markets job right after a promotion, he said. The prospect of a financial windfall also helped.
“With banking you can make good money in the short term, but with startups, if you grind it through, it will lead to big fortunes,” said Lam, 30, who founded Butler with alumni of Goldman Sachs Group Inc. and Wells Fargo & Co. The startup completed a funding round last year and has 30 employees.
Asia’s economic rise has made it one of the world’s most attractive regions for entrepreneurs. Its share of global startup investments rose to about 40% in 2015-2017, up from 10% a decade earlier, according to McKinsey. It’s home to more than a third of the world’s unicorns, the nickname for startups valued at $1 billion or more.
The attrition is made more acute by the fact that finance is still a growth industry in Asia and is smaller relative to the overall economy than in the U.S. and Europe. More than half of finance firms in mainland China surveyed by recruitment firm Michael Page expect to increase their headcount by about 11% this year, on average. Financial services will likely be the most-active recruiter in Hong Kong and the second most-active in Singapore, the poll showed.
Some smaller hedge funds and money managers in Hong Kong are offering double the salary to lure talent, two quantitative trading analysts at a Wall Street bank said based on approaches from headhunters. Private equity firms, where employees get a share of profits, have also been active recruiters of junior talent in the past year, including Bain Capital, PAG and Hillhouse Capital, one of the people said.
In Singapore, opportunities are sprouting at hedge funds and private equity firms as well as a new breed of fintech and digital banking firms, according to Lim Chai Leng, a senior director at recruiting firm Randstad Singapore.
A former banking associate at HSBC in Hong Kong, who asked not to be named, jumped to a fund manager last year, accepting a 20% cut in base salary. He’d seen his total remuneration rise 70% over four years with the bank, he said, but wanted to get on the path to managing his own capital.
Startups and smaller boutique firms can offer flexible working and other benefits that established players have struggled to keep up with, said James Carss, managing director at executive search firm NRG in the U.K. The churn rate in the U.K. is three to four months behind Asia, but is likely to catch up, he said.
Big technology firms are also drawing from the banks. Morgan Stanley Vice President Shiyi Lin last month left to join the strategic investment group at Alibaba Group Holding Ltd., according her LinkedIn page. In Singapore, Jack Ma’s Ant Group Co., Southeast Asia’s most-valuable startup Grab Holdings Inc. and its most valuable company Sea Ltd. are setting up digital banks.
Daniel Yuan, a Yale-educated former analyst at Goldman Sachs, left in 2019 to become chief of staff at online finance company Futu Holdings Ltd. While he credits Goldman for teaching him everything he knows about finance, he found his ability to move up the ladder too rigid.
“I knew exactly what I needed to do and how long I needed to keep doing this in order to advance my career at Goldman,” Yuan said. “At a leaner and more entrepreneurial corporate like Futu, there’s a lot of flexibility around what I can do, especially in my capacity as the chief of staff.”
Banks are starting to notice. One example is Lam’s old firm, HSBC, which counts Hong Kong as its largest market. The lender, which is in a midst of a major pivot to Asia, last month promised a shorter career path for new associates, offering promotions after three years instead of four. It also pledged to boost pay. JPMorgan is also hiring more junior bankers and staff globally.
Lenders are raising pay for junior employees, enforcing curfews and adding staff to prevent defections and ease discontent as a jump in deals during the pandemic intensified the focus on work-life issues. Wall Street was set abuzz earlier this year by a leaked presentation from junior analysts at Goldman Sachs that detailed their grueling workload and punishing hours.
Spokespeople for Goldman, HSBC and JPMorgan declined to comment for this story.
“In Asia, junior bankers are more likely to leave for career opportunities that they see as more financially attractive,” said John Mullally, regional director at Robert Walters in Hong Kong. “The long hours and stress of banking careers are a factor, but just not as much as it is for their counterparts in Europe and the U.S.”
For some beleaguered bankers, the exodus of their colleagues at the same time as dealmaking is thriving, is taking its toll. Over the past 12 months, mergers and acquisitions have jumped 30% in Asia Pacific, while initial public offerings have risen 44%, according to data compiled by Bloomberg.
An associate at JPMorgan, who asked not to be named, said his workload doubled after a colleague quit for a financial technology firm in December, leaving him to work 18 hours a day, on average, without a break for almost two months.
He’s now actively hunting for a job at a buy-side firm, he said, looking for a place with less hierarchy and more opportunities for career advancement.