In a global survey, many respondents believe that China has overtaken or eventually will overtake the U.S. as the world’s leading superpower. Chinese are shown here walking in Shanghai’s financial district in March.
The rise of China’s banking sector is providing new opportunities for risk and compliance specialists. China is an attractive market for global financial institutions and is expected to continue to grow, with a market size of RMB$10.53 trillion last year, a 20 percent rise over 2020.
The following list shows revenues of the mainland’s main houses, and the potential for global institutions to participate in the market.
o China Citic Securities RMB 34,885M
o Guotai Junan RMC 19,554M
o China Galaxy RMB 1,821M
o JP Morgan RMB 632M
o UBS RMB 1,550M
o Credit Suisse RMB 497M
o Morgan Stanley RMB 414M
o Goldman Sachs RMB 600M
This growth in Greater China business has led to changes in hiring practices for international banks. Previously they tended to seek risk and compliance candidates with global exposure, but now there is growing demand for those with strong China market exposure.
In a sign of the importance that risk and compliance now has in China, its government has said more than once that it is crucial to regulate corporate investment and business practices, and to ensure compliance operation and management, so as to fulfil social responsibility.
Chinese lenders have also been expanding outside the mainland; as of 2017, 18 of 39 listed banks had operations in 60 territories, with 7 of them having branches only in Hong Kong. Senior executives at overseas branches are generally sent from headquarters. As many are relatively inexperienced at operating in different regulatory jurisdictions, this also provides a need for experienced compliance professionals.
According to ratings agency Fitch, changes in the regulatory environment announced in the Chinese government’s 2021-2025 five-year plan “will encourage the development of more substantial franchises and intensify industry consolidation. The sheer size of the Chinese capital markets will be supportive in accommodating a number of large securities companies with strong balance sheets.”
“The strengthening of the regulatory environment and deeper markets will likely benefit securities firms with robust investment banking and asset management franchises, as well as those with strong information technology capability. The latest regulatory developments, which focus on risk management and compliance performance, will probably help larger securities companies improve risk infrastructure, enhance self-regulation and temper risk cultures.”
Again, these developments should bode well for risk and compliance specialists seeking work with Chinese financial institutions and companies. We expect a demand for experienced candidates who can cover mainland markets and those with a good understanding of the securities and banking regulatory commissions.
Meanwhile in Hong Kong, mainland securities houses are offering competitive pay to lure risk and compliance professionals from global investment banks in order to create a more international culture. There is also an increased demand for Mandarin-speakers who can perform a multi-function role rather than be limited to specific sectors.
Overall, we see a continued trend for hiring based less on whether a candidate has worked for global banks, but more on general experience – including exposure in the mainland market. Also the differences between Chinese and global houses are narrowing, with professionals from both sides enjoying a unique advantage because of market conditions. Candidates with experience in Chinese houses are able to offer value to the growth of the mainland market, while those from international banks can bring understanding of global governance regulations and practices.