Recruiting in China

China's central bank on Friday continued to pump money into the interbank market via reverse repos to ensure stable liquidity.

The People's Bank of China (PBOC) conducted 100 billion yuan (nearly 15 billion U.S. dollars) of seven-day reverse repos with an interest rate of 2.45 percent, and 40 billion yuan of 14-day reverse repos with an interest rate of 2.6 percent.

Offset by 100 billion yuan of maturing operations, the move resulted in a net injection of 40 billion yuan.

In Friday's interbank market, the overnight Shanghai Interbank Offered Rate, which measures the cost at which banks lend to one another, rose 2.92 basis points to 2.8152 percent.

There was a total of 280 billion yuan of net cash injections for financial institutions from Monday to Friday, down from 510 billion yuan a week ago.

The PBOC has increasingly relied on open-market operations for liquidity, rather than cuts in interest rates or reserve requirement ratios, to maintain a stable money market.

China set the tone of its monetary policy in 2017 as prudent and neutral, keeping an appropriate liquidity level but avoiding excessive injections.

Titans clash over mobile payments

The competition in China's mobile payment market is growing tougher with the standardization of China UnionPay's quick-response code technology in December. The head-to-head digital hongbao wars between the two dominant players WeChat and Alipay during the Spring Festival holidays provides one piece of evidence. Behind the cutthroat turf war, both of the platforms have broader ambitions, including creating tailored financial products based on their collections of big data. In the near future, the industry will also be subject to tighter regulations.

It was not so long ago that the red envelopes, or hongbao, that people handed out during the Spring Festival holidays were actual red envelopes.

But over the last few years, many of the red envelopes stuffed with cash have existed only virtually on online payment platforms.

During this year's Spring Festival, a record of 46 billion electronic hongbao were sent and received via Chinese mobile social platform WeChat, which is operated by Tencent Technology Co, the Xinhua News Agency reported on Saturday. The figure was up 43 percent year-on-year.

Internet giants such as Tencent have promoted the use of virtual hongbao to expand their stakes in China's fast-growing mobile payment market, as local shoppers are now using their smartphones to pay for everything from taxi fares to medical expenses.

In 2016, China's third-party payment market is estimated to reach 20.3 trillion yuan ($2.96 trillion), up 45 percent from 2015, according to research firm Enfodesk. It projected that the market will grow by more than 20 percent annually to 33 trillion yuan by 2018.

The huge market base has lured a number of companies, making the turf war for China's mobile payment market more cutthroat.

Early market entrants including WeChat and Alipay, which are run by Tencent and Alibaba respectively, have developed swipe-and-go payment systems based on quick-response (QR) codes. The two companies, which together control more than 70 percent of the market, have strived to secure their predominant position by spending heavily on discounts.

As a result, the use of credit cards has declined, rattling the country's bank card association.

On December 12, 2016, China UnionPay announced its own standards for QR code payments. The move was followed by promotional campaigns involving more than 20,000 stores from December to February, a peak time for shopping.

Latecomer

It is not the first time that China UnionPay stepped up efforts to tap the mobile payment market. In December 2015, the bank card association rolled out its near-field communication (NFC)-based Quick Pass mobile payment tool, which enables consumers to make payments by tapping their smartphones against payment terminals.

But the NFC-based technology was not as popular as QR codes.

"That's probably why UnionPay developed its own QR code last year," said Li Yi, a research fellow at the Internet Research Center under the Shanghai Academy of Social Sciences.

Li was not optimistic that commercial banks would be able to break in. "WeChat and Alipay have a lock on the huge market thanks to an early entrance," he told the Global Times on Monday.

But UnionPay still stands a chance in the mobile payment market because its technology is safer and more trustworthy, Li noted.

An employee from a commercial bank, who preferred not to be identified, agreed. "UnionPay also has an advantage in large payment transactions because WeChat and Alipay are more frequently used in payment of small amount," the bank employee told the Global Times on Monday.

For example, the two digital wallets account for around 80 percent of the mobile payment market which are under 5,000 yuan, according to the employee.

However, Liu Dingding, an independent Internet industry analyst, pointed out that the cooperation between UnionPay and commercial banks is crucial to the bank card association's goal of getting to the top.

Currently, UnionPay and the commercial banks have a "strange bedfellows" relationship, Liu said.

"UnionPay is looking to promote QR code with banks, but the logistics behind major banks' moves are different - they seek to expand the user base of their own mobile applications so that they can engage with clients directly, which means banks may also cooperate with WeChat and Alipay if UnionPay's promotion has not achieved their desired result," Liu told the Global Times on Sunday.

Broader ambitions

To date, the battles in the mobile payment market between the two tech giants, Alibaba and Tencent, have also intensified.

Head-to-head against WeChat's hongbao-grabbing activities during the Spring Festival, Alipay continued last year's collection of five good fortune games with the introduction of augmented reality technology. Participants can split a 200 million yuan prize by scanning the street-side "fu" signs, or the Chinese character of fortune, that are ubiquitous during the holidays.

To attract users, the two digital wallets are also locked in a competition for offline payment points for businesses such as restaurants, supermarkets and department stores. Therefore, both platforms turned to third-party services providers who specialize in "offline promotion" and merchants services for potential offline business growth.

For example, WeChat announced in April a plan to attract third-party services providers with more than 300 million yuan in investments. Alipay also plans to provide 1 billion yuan in rewards to third-party services providers over the next three years.

But behind the tit-for-tat competition, both Alipay and WeChat have broader ambitions.

One is the collection of big data related to transactions, which enable those platforms to invent and tailor financial services such as marketing strategies, investment and loans to their clients, Liu said.

Tencent has been struggling with how to generate revenues based on its huge consumer bases. In an interview with Caixin magazine in January, Huang Li, director of WeChat Payment, refused to elaborate on the business blueprint for the platform, only noting that the company is considering a strategy "as a whole."

Regulatory controls

In the near future, the country's third-party payment market will face greater regulatory control.

In January, the People's Bank of China (PBC) announced a new regulation that requires third-party payment companies to deposit clients reserve funds in bank accounts that do not generate interest. The new rules are intended to ensure institutions do not put the money into "risky" financial services. It is expected to takes effect in April.

An Alibaba spokesperson refused to comment on the policy's effect on its business. He said that the company "welcomes the policy and will actively impose it."

According to a report published by research firm TrendForce, following the policy implementation, major domestic payment providers, including Alibaba and Tencent, will suffer a blow, as the policy prevents them from using the funds to generate interest income or grow their business.

But Li disagreed. "Large-scale firms do not rely on interest from client funds. So the new measures will only hurt small third-payment firms."

Yet the policy is likely to tip the scales in UnionPay's favor, Li noted.

Bank of China chairman Tian Guoli speaks at the Bank of China - Bloomberg Global M&A Summit on Tuesday.

Mergers and acquisitions have accelerated the transformation of China's financial industry, according to leaders in the field.

Vice chairman and president of China Investment Corporation, Tu Guangshao told the Bank of China – Bloomberg Global M&A Summit on Tuesday that the sector was changing.

"The expansion from trade finance to acquisition finance will provide a strategic opportunity for development of the Chinese financial sector," Tu said.

"Acquisition finance requires financial institutions to adjust the content of services they provide, improve their product systems, increase the effectiveness of their organizational structures and put risk management well in place," he continued.

Zhu Min, former deputy managing director of the International Monetary Fund, said M&A is a crucial engine for post-crisis economic growth.

He said it will lead the global economy out of the gloom through supply-side restructuring.

In the first half of 2016, the volume of cross-border mergers and acquisitions led by Chinese buyers reached $149.2 billion, exceeding the total volume in 2015. The amount accounted for 23 percent of the total volume of global cross-border M&A, up from 6 percent in the same period last year, according to Tian Guoli, chairman of Bank of China.

"As the cross-border M&A by Chinese companies has entered a new stage, it is pushing forward the transformation and upgrading of China's financial sector," he said.

Bank of China has established an investment and loan linkage mechanism via diversified platforms and has 600 branches in 47 countries and regions.

"During the process of promoting industrial upgrade through cross-border M&A, Chinese companies should also pay close attention to potential risks to avoid shortsighted, irrational acquisitions that are seeking instant benefits," Tian said.

Certain M&A projects were overpriced and had problems with post-acquisition integration of businesses, he added.

China’s four biggest banks reported that staff numbers fell by the most in at least six years in the first half, highlighting the possibility that employment has peaked at the firms that are the world’s biggest providers of banking jobs.
A decline of 1.5 percent from the end of last year left 1.62 million workers at Agricultural Bank of China Ltd., Industrial & Commercial Bank of China Ltd., China Construction Bank Corp. and Bank of China Ltd., earnings filings showed. Agricultural Bank, the No. 1 bank employer, saw its number of employees slip below half a million.
While a fall in the first half is not unusual, the 25,000-job decline is the biggest since at least 2010 and analysts at firms including BOC International Holdings Ltd. and DBS Vickers Hong Kong Ltd. say changes to how banking is done will limit prospects for increases.
“Chinese banks went through years of expansion, adding physical outlets that helped to push their staff numbers to a peak,” said Polar Zhang, a Beijing-based bank analyst at BOC International. He expects the workforce to “dwindle” on technological advances and cost cutting.

Chinese lenders take four of the top five slots for employment by listed banks around the world, ahead of the likes of Wells Fargo & Co., HSBC Holdings Plc, JPMorgan Chase & Co. and Citigroup Inc., data compiled by Bloomberg show. Russia’s Sberbank PJSC is in the top five.
Economic Slowdown
Lenders from Citigroup to Deutsche Bank AG have cut staff and costs in revamps since the global financial crisis.
While Chinese banks have avoided the multi-billion dollar fines for compliance breaches that have weighed on their international counterparts, they’re under pressure from an economic slowdown and a rising quantity of bad loans. Margins are falling as the government deregulates the industry and online and mobile players like Zhejiang Ant Small & Micro Financial Services Group -- also known as Ant Financial -- and Tencent Holdings Ltd. eat into their businesses.
Chinese lenders have generally reduced numbers by not replacing staff who leave, according to Shujin Chen, a Hong Kong-based analyst at DBS Vickers Hong Kong. Workers are departing in search of better pay, she said, adding that banks would need less staff as artificial intelligence and online and mobile transactions played a bigger role and lenders developed robots that would interact with customers.
Besides a reduced number of workers, the first-half data also pointed to pressure on pay. The big four banks’ combined staff compensation costs -- including salaries, bonuses, allowances and post-employment benefits -- fell 2.6 percent from a year earlier. At the mid-sized China Minsheng Banking Corp., the decline was 22 percent.

Flat revenue and rising pressure on asset quality means “banks have been pushing even harder in cost optimization,” Wei Hou, a Hong Kong-based analyst at Sanford C. Bernstein & Co., wrote in a note.
— With assistance by Jun Luo

The departures come as the banking industry struggles against strong financial headwinds.

China’s biggest banks have eliminated thousands of jobs in the past six months to June 2016, as the nation’s banking industry, despite avoiding the huge fines for compliance breaches that weighed on their Western peers, has seen a challenging year amid a sluggish economy, lower interest margins and top-down financial reforms.

Big banks in China have announced almost 1.62 million new job cuts this year, and thousands more are expected, as the wave of lay-offs that began in 2013 shows no sign of abating.

So far, 10 out of the 16 listed mainland banks have reported a headcount drop. The top six listed banks, which reported their weakest profit growth in a decade, have cut a combined total of 34,691 jobs in the first half of the year, the semi-annual reports of the banks showed. This marks the biggest scale of employee departure ever recorded in China’s banking sector, which has expanded uninterrupted over the past 10 years.

Salaries are also going down
According to several media reports, many banks have been easing staff for different reasons, with China Merchants Bank scaling back the most, cutting 10 per cent of its workforce. Bank of China said its headcount at the end of June 2016 had decreased by 6,881 to a total of 303,161 employees. Agricultural Bank, the nation’s biggest bank employer, lost 4,023 staff while Industrial and Commercial Bank of China cut back by 7,635. China Construction Bank also shed 6,721 staff to 362,462.

Besides a reduced number of workers, salaries are also going down as Chinese banks’ profits slid 3.5 per cent on the year, while the four state-owned banks reported profit growth below one per cent. In addition, the first-half data showed that Industrial and Commercial Bank of China, Agricultural Bank of China and China Construction Bank reduced their salary expenses, including salaries, bonuses, allowances and post-employment benefits, by 1.6 percent, 2.9 percent, and 2.18 percent respectively.

Compensation structures are generally different in Chinese banks compared to their Western peers. For example, the average annual income for a mid-level banker can typically range between $100,000 to $125,000 while similar international counterparts offer more than double those salaries. They also offer longer holidays and fewer travel curbs, while Chinese staff can only get five days annual leave and must request approval from authorities before being allowed travel abroad.

Streamlining its recruitment processes for millennials makes good business sense for KPMG, as it proves the professional services firm has listened to feedback, says a spokesperson.

The comments come after news that KPMG has cut back on its recruitment processes for millennials, as Recruiter reported earlier this week. The firm has condensed its traditional three-stage recruitment process of first interview, assessment centre and final interview into a single day.

KPMG’s new streamlined approach, known as Launch Pad, also enables students to gain new skills, network with existing KPMG staff and partners, as well as their peers.

The firm’s move follows research carried out with market research company High Fliers Research that showed millennials were frustrated by lengthy recruitment processes (34%) and poor communication from their potential employer (43%), with over half complaining they did not receive any feedback when applying for a role.

A KPMG spokesperson told Recruiter in a statement it made good business sense for the firm to listen to views and feedback about graduate recruitment, and transform its practices to show graduates of all ages the firm listens to their feedback and adapts processes.

This is especially important, the spokesperson added, due to the “fierce” competition for the very best graduates, “even more so now big businesses are competing with smaller start-ups as well as their traditional competitors”.

The spokesperson said the new process provides more certainty to candidates about what will happen and when.

“Successful candidates will receive a job offer more quickly so that they can then focus on their studies and university life without needing to attend further interviews.

“There’s also the opportunity to learn a new skill. This will help them to determine whether KPMG is the right fit for them.”

The programme is being rolled out now for 2017 graduate trainees, while the firm will be running Launch Pad recruitment events around the country from October 2016.

Shanghai stocks ended nearly flat yesterday, with falls seen in financial and insurance firms.

The Shanghai Composite Index edged up 0.1 percent to close at 2,994.32 points.

Banks were vulnerable following investor concerns that curbs on their investment in wealth-management products might restrict capital flow.

China Everbright Bank lost 1.55 percent to 3.82 yuan (57 US cents), and China Merchants Bank shed 1.32 percent to 17.14 yuan.

China Life Insurance Co fell 1.35 percent and Ping An Insurance Group lost 1.04 percent after the China Insurance Regulatory Commission said local insurers' combined profits plunged more than 54 percent in the first half due to lower investment return despite growing premium income.

Airlines gained as oil prices declined, with China Eastern Airlines adding 1.29 percent to 7.01 yuan and China Southern Airlines jumping 1.85 percent to close at 8.54 yuan.

China's central bank drained 220 billion yuan (33.85 billion U.S. dollars) from the market this week to ensure stable money supply.

This follows a drain of 290 billion yuan from the financial system last week.

The People's Bank of China (PBOC) conducted 360 billion yuan in seven-day reverse repurchase agreements (repo) this week, a process in which central banks purchase securities from banks with an agreement to resell them in the future.

With 580 billion yuan's worth of repos maturing this week, the PBOC ended up draining a net 220 billion yuan from money markets.

On Friday's interbank market, the benchmark overnight Shanghai Interbank Offered Rate (Shibor), which measures the cost at which Chinese banks lend to one another, was down by 0.1 basis points to 2 percent.

The Shibor for seven-day loans fell 0.3 basis point to 2.326 percent. The Shibor for three-month loans dropped 0.2 basis point to 2.894 percent.

By LAURIE BURKITT, JOANN S. LUBLIN And DANA MATTIOLI
Updated Jan. 15, 2016 5:17 a.m. ET

BEIJING— General Electric Co. agreed to sell its appliance unit for $5.4 billion to Chinese manufacturer Haier Group, which is looking to expand its products into homes around the world.

GE and Haier announced the deal Friday, saying the companies will cooperate world-wide to expand their reach in health care, advanced manufacturing and the industrial sectors.

The deal will help Haier sell refrigerators, washing machines and other appliances that are already popular in China overseas after years of struggling to gain a stronger foothold in the U.S. and elsewhere. Haier said it will have the rights to use the GE brand for appliances for 40 years.

The acquisition also enables GE to focus on its industrial business—jet engines and power turbines instead of washing machines and even finance.

“Haier has a good track record of acquisitions and of managing brands,” GE’s chairman and chief executive officer Jeff Immelt said in a news release. “Haier has a stated focus to grow in the U.S., build their manufacturing presence here, and to invest further in the business.”

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Qingdao Haier Co., a Shanghai- listed company in which Haier owns 41%, will acquire the GE appliance unit, Haier said. It said the deal “establishes a model for cross-border investment and cooperation between China and the United States.”

The deal, which values GE Appliances at 10 times the last 12 months of earnings before interest, taxes, depreciation and amortization, according to GE, was reported earlier by The Wall Street Journal.

It marks the third major overseas acquisition by Chinese companies this week.

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China’s Haier Nears Deal to Buy GE Appliance Business
A consortium of investors including China National Chemical Corp. on Sunday agreed to buy KraussMaffei Group for 925 million euros ($1 billion), one of the largest Chinese takeovers of a German company. Two days later, Chinese conglomerate Dalian Wanda Group Co. agreed to acquire production and finance company Legendary Entertainment for $3.5 billion in cash, the largest China-Hollywood deal to date.

GE has been running an auction for the century-old appliance business since it abandoned a $3.3 billion sale to Sweden’s Electrolux AB in December. The U.S. Justice Department had sued to block that transaction, saying the combination of the two companies would hurt competition for cooktops and ranges. Haier is unlikely to face the same antitrust hurdles as Electrolux because of its small presence in the U.S.

In seeking a fresh buyer, GE executives wanted “a better deal” than they had gotten from Electrolux, one person familiar with the matter said. GE also stands to receive a $175 million breakup fee from Electrolux.

The Chinese appliance maker outbid other foreign corporate bidders for the Louisville, Ky.-based business, according to a person close to the deal.

Haier has struggled to compete in the U.S. While it calls itself the biggest appliance maker in terms of unit sales, Haier is mainly known in the U.S. for niche products such as compact refrigerators and window air-conditioning units.

The privately held company has also been expanding its range of products and retail partners in the U.S. Last August, Haier said it would invest $72 million to expand its 15-year-old refrigerator plant in Camden, S.C.

The GE transaction, however, will vault the Chinese company past Electrolux and other rivals in the U.S. market for white goods, which is currently led by Whirlpool. Sales for the GE Appliances and Lighting division, of which appliances is the lion’s share, were $8.4 billion in 2014.

Haier held talks with GE in 2008 to buy the U.S. firm’s appliance unit. In 2010, a Haier executive said the company didn’t buy at the time because the price for the unit was too high. Haier also made an unsuccessful bid for Maytag Corp. in 2004, but lost out to Whirlpool.

Since then, Haier has been vying for more U.S. retail partners, tapping major advertising agencies in an effort to become a household name. Haier held a 29.8% market share of major household appliance sales in China last year, compared with 5.6% in the U.S., according to market research firm Euromonitor.

For Haier, which had $32.6 billion in revenue world-wide in 2014, growth overseas is critical. Profit margins from the company’s refrigerators and washing machines in China are razor-thin due to increased competition at home, where online shopping has sparked price wars, pushing down prices in the electronics and appliances sector.

Another drag on business is that fewer people in China are buying new homes and thus need fewer new appliances.

The deal will broaden Haier’s customer base and distribution channels. It will also sharpen its credibility in the U.S., where “Chinese brands are perceived as low quality,” said Klaus Meyer, a business professor at China Europe International Business School in Shanghai.

Based in China’s northeastern coastal city of Qingdao, Haier is one of China’s legacy state-owned enterprises. Haier’s chief executive, Zhang Ruimin, was the general manager when the company started in 1984 as a successor to a loss-making refrigerator factory that had been opened in 1949, when Chairman Mao Zedong founded modern China.

Mr. Zhang, now 67, has become somewhat of a legend in business circles back home, building a no-nonsense demeanor when he, as newly appointed chairman in 1985, grasped a sledgehammer, smashing a faulty refrigerator to demonstrate zero tolerance for shoddy products at the factory.

Within his first decade as chairman, he transformed Haier, creating China’s largest appliance maker and becoming the first businessman appointed to China’s Central Committee, one of the Communist Party’s highest decision-making bodies.

Mr. Zhang built the brand by investing in a cartoon in the 1990s called the “Haier Brothers,” creating mascots that generations in China came to recognize long after the airing of the more than 200 episodes. Today, Haier has become one of the China most valuable brands, worth $1.9 billion in 2015, according to media agencies Millward Brown and WPP, which calculated the value using the company’s financial data and consumer survey data.

GE Appliances will keep its headquarters in Louisville, Ky, the companies said.

Haier said in a statement to the Shanghai Stock Exchange if the deal ceases due to failure to obtain approvals from antitrust regulators, Chinese regulators or Qingdao Haier’s shareholders, Qingdao Haier will be required to pay $200 million to $400 million to GE as compensation.

GE’s assets Haier is acquiring had a book value of 1.84 billion dollars as of the end of 2014.

—Ted Mann in New York and Rose Yu in Shanghai contributed to this article.

The China Banking Regulatory Commission has revoked the private fund-manager licenses of 17 commercial banks, over what sources said were legal concerns.

A person close to the CBRC said on Wednesday the specific reason could be that they had violated certain conditions under the Law on Commercial Banks, which does not allow lenders to operate integrated securities investment operations.

Instead, they have to set up subsidiary companies to engage in the business, but only after undergoing close government examination and approval.

The 17 are believed to include China Everbright Bank, Ping An Bank, SPD Bank, China Minsheng Bank, Bank of Ningbo, Bank of Beijing and China Zheshang Bank.

Five of these banks registered departmental general managers with the Asset Management Association of China as their qualified private fund managers, while the 12 others named their chairmen, according to Caixin Media.

Nine of the banks applied as securities investment managers, four as private equity investment firms, and four as other types of investment operations.

All private equity and securities investment funds are required to register with the Asset Management Association to gain licenses.

The Asset Management Association declined to comment on the issue.

Huang Peng, a partner at Beijing-based Guantao Law Firm, said commercial banks conducting such investment business remain controversial, both in China and overseas.

Some have suggested that banks running simultaneous lending and investment operations could increase the risk of moral hazard, while others have said it is feasible, as long as different departments manage the businesses separately.

Anbang Insurance Group Co raised its stake in China Minsheng Banking Corp Ltd to 19.28 percent last week, according to a disclosure published on Monday by the Hong Kong Stock Exchange.

For Anbang, which is spending more on real estate and financial services investments, it was the ninth share increase in the country's biggest private lender over the last three months.

China Minsheng shares gained 1 percent in Shanghai trading to close at 10.49 yuan ($1.75). The stock has gained about 70 percent over the last three months.

In December 2014, the Beijing-based insurer raised its stake in Chinese property firm Financial Street Holdings Co to 20 percent, while increasing its shareholding in China Merchants Bank Co Ltd to 10 percent.

A Bank of China branch in Yichang, Hubei province. China's top five banks will raise 128 billion yuan ($20.8 billion) over a two-week period.

China's top five banks will raise 128 billion yuan ($20.8 billion) in a two-week bond offering spree following a yearlong hiatus, as regulators signal a willingness for lenders to aggressively tap fixed-income markets.

The country's banking regulator began phasing in new higher capital adequacy requirements last year, in line with global rules known as Basel III, and aggressive implementation of the third Basel accord is a key element of China's plan to fortify banks against risks from a slowing economy.

China Construction Bank Corp and Agricultural Bank of China Ltd, the country's second and third-largest banks, respectively, have announced plans to raise 50 billion yuan worth of Basel III-compliant Tier 2 capital via domestic bond issues on Friday.

Bank of Communications Co Ltd, the country's fifth-biggest lender, plans to raise 28 billion yuan on Monday.

The issues follow two large offerings last week, the first from the country's top five banks since early 2013 and China's transition to Basel III.

Industrial and Commercial Bank of China Ltd and Bank of China, the country's largest and fourth-largest lenders, together offered 50 billion yuan of bonds last week.

The flurry of offerings shows Chinese regulators have signed off on the giant deals despite their potential drain on market liquidity, and are comfortable with the new Basel III-compliant bond structure, sources told IFR Asia, a Thomson Reuters publication.

China's economy showed further signs of softening in July despite a burst of government stimulus measures, and banks have tightened lending to risky areas such as the property sector.

The government embarked on a massive credit-fueled economic stimulus program from 2008 to 2010 to pull the economy through the global financial crisis. Many analysts expect a large portion of bank loans extended during that time to turn sour.

The fundraising spree still leaves China's top lenders lagging regional counterparts.

Asian banks (excluding Japan and Australia) have raised more than $32 billion in Basel III compliant securities to date, which includes $26 billion issued in 2014, in local and international markets, according to Moody's data.

Steven Chan, a banking analyst at Maybank Kim Eng, a Singapore-based research firm said the amount being raised was small viewed against the assets of China's top lenders. "It's very small compared with the trillions of assets," he said.

China's big State-owned banks have announced plans to raise $43.5 billion in on- and offshore Tier 2 capital by the end of 2015.

Agricultural Bank of China plans to sell 50 billion yuan of Tier 2 securities, Bank of Communications is in for 40 billion yuan and China Construction Bank for 60 billion yuan. ICBC is eyeing a total of 60 billion yuan, while Bank of China will make a play for the same.

All that makes for a total of 270 billion yuan in Basel III compliant bonds that will hit the market - more than from any other single country.

Lenders are issuing to replace old-style Tier 2 bonds that are about to mature and hold yields down, Chan said.

"If you don't repay bondholders, the yield will increase automatically, so the best way is to issue bonds at a similar or lower rate to repay the earlier one."

A total of 93 billion yuan of subordinated bonds from China's commercial banks will mature next year, according to China Central Depository & Clearing, a State-owned clearinghouse for onshore bonds.

The Chinese government on Wednesday unveiled measures to develop the insurance industry, vowing to raise premium incomes to 5 percent of GDP by 2020.

The package, announced on the State Council website, let the insurance industry play a bigger role in the fledgling social security network.

The second of its kind since 2006, the package could see citizens paying an average of 3,500 yuan (565 U.S. dollars) per capita in premiums by 2020.

Commercial insurance will become the primary undertaker of individual and household programs and an important supplier of corporate pensions and health insurance.

The insurance will be given a bigger role in the prevention and relief of disasters and accidents through the introduction of catastrophe insurance products.

Insurance funds will be encouraged to invest in bonds and equities to support major infrastructure projects, urban renewal and urbanization.

The government will encourage the house-for-pension insurance experiment and launch a pilot program to introduce compulsory insurance for environmental pollution, food safety, medical accidents and campus safety.

Zhao Xianghuai, an analyst with Guotai Junan Securities, believes the package will open more space for China's insurance industry, which had a total assets worth 9.4 trillion yuan by the end of June this year.

"The package has elevated the position of the insurance industry and created new room for development," Zhao said.

Boosted by the announcement, Chinese insurers rose across the board on the stock markets, with New China Life Insurance Co., Ltd. leading the gains, up 3.57 percent to 25.27 yuan.

ZTE Corp, a leading Chinese telecom equipment and smartphone manufacturer, aims to increase its presence in international markets and establish itself as a multinational firm through boosting the number of its patents.

"We've made the development of intellectual property rights our company's core strategy, especially when expanding to overseas markets," said Guo Xiaoming, vice-president of the company, which is based in Shenzhen, Guangdong province.

Guo said that if a company doesn't have a solid foundation in intellectual property rights, it will be very difficult to establish itself in overseas markets, especially in matured markets such as the United States and Europe.

"We've been putting the development of intellectual property rights on top of our company's agenda. We've also been investing heavily in research and development," he told a media briefing on Monday.

Guo said ZTE invests about 10 percent of its annual sales on research and development every year. It has injected more than 40 billion yuan ($6.42 billion) on R&D over the past five years.

According to a report from the World Intellectual Property Organization in March, ZTE filed 2,309 Patent and Cooperation Treaty applications in 2013, becoming the world's second largest patent filer.

Panasonic Corp of Japan – with 2,881 published applications — was the top applicant last year. ZTE was the top applicant in 2011 and 2012, while Panasonic headed the applicants' list in 2009 and 2010.

Rather than the quantity of patents, Guo said ZTE eyes their quality.

"The cost of filing a patent in Western countries is quite high — usually 50,000 to 80,000 yuan for each application. We only file those inventions that have the biggest potential in monetization," he said.

Ten private companies will launch five banks that are entirely funded by private capital in Tianjin, Shanghai, Guangdong Province and Zhejiang Province as part of a pilot program, Shang Fulin, head of the China Banking Regulatory Commission, said Tuesday.

The establishment of the private banks, which was approved by the central government in January, is considered a vital step in the country's financial reform and its opening-up of the banking sector to private capital.

Internet giants Tencent Holdings and Alibaba Group will be among the 10 companies approved to participate in the pilot program, Shang said, adding that the five private banks should have differentiated market positioning.

Shang did not provide details about the names of the five banks, or the amount invested in them.

The website of People's Daily quoted Shang as saying on Monday that the 10 companies will also include Fosun International, a real estate conglomerate, and Chint Electrics Co, an electrical equipment maker.

Each bank must have two private investors, Shang said, and they will be allowed to open for business when they have made sufficient preparations.

The private bank that Tencent plans to initiate will specialize in providing products for the burgeoning online finance sector, a staff member of Tencent told the Global Times Tuesday on condition of anonymity.

"Tencent will utilize its advantages in the Internet service industry, and [launch] online financial products based on the services provided by the traditional banking sector," the source said.

The staff member said the bank will be located in Qianhai, a district of Shenzhen in South China's Guangdong Province. Qianhai was approved by the State Council in 2010 as a test ground for the free cross-border flow of the yuan and financial innovations.

A staff member of Alibaba, which is a partner in Yu'ebao, one of the country's most popular online money market funds, told the Global Times Tuesday that Alibaba is working with China Wanxiang Holdings Co to apply for a private bank license.

"Now our application materials are still being reviewed," said the staff member, who wished to remain anonymous.

Wanxiang Holdings is part of China's biggest auto parts company Wanxiang Group, which is based in Hangzhou, East China's Zhejiang Province.

The Alibaba source declined to comment on the location or market positioning of the bank.

Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, told the Global Times Tuesday that the private banks will offer loans of up to 1 million yuan ($162,879) that will mature in less than two years.

The banks' major customers will be those that have difficulty in getting loans from large commercial banks, Dong said, such as small and micro-sized businesses. That is why the new program will not have a disruptive impact on the banking sector or influence the interest rate, he said.

According to Shang, the private banks will be regulated in the same way as large commercial banks, but their performance will be more market-based.

Milestones in opening up to private investment

May 23, 2012 The State Council required sectors including railways, telecoms and banking to draw up detailed rules for encouraging private investment.

May 26, 2012 The China Banking Regulatory Commission (CBRC) said it would encourage greater private investment in the banking sector, without imposing restrictive or other additional conditions.

Jun 19, 2013 The State Council said China should set up private banks and financial lease companies that bear the burden of risk on their own.

Mar 11, 2014 CBRC chief Shang Fulin said China will set up five private banks on a trial basis.

Since China Minsheng Bank Corp became the first private bank in 1996, the government has not approved any others, although it has allowed a small amount of private capital to be invested in commercial banks. This will soon change as the government opens up the financial sector to private enterprises.

China now has five State-owned commercial banks, three policy banks, 12 joint-stock banks, 144 city commercial banks, 47 foreign capital banks and numerous banks in towns and rural areas. The introduction of private banks will introduce more competition to the industry to the benefit of private businesses strapped for capital.

Until now, the names of more than 40 private bank applicants have gained pre-approval from the State Administration for Industry and Commerce. However, the success of Minsheng, which was founded at a time when loans for small and medium-sized enterprises were relatively undeveloped, is unlikely to be repeated today given the many financial products fighting for customers' attention. Some private banks are bound to fail if they do not have a sound risk-control system.

With the opening up of the banking industry to private capital after 14 years of hiatus. The biggest change in the policy is that private enterprises have seen their status elevated from "equity participator" to "initiator", according to the guidelines issued by the State Council in July that encourages more private capital to enter the financial industry.

Private banks that are filing for approval fall into two categories. First, there are enterprises or business associations that seek easier financing channels for the industry. For instance, Suning Commerce Group Co Ltd, a leading home appliance retailer, was the first listed company to announce its plans to apply for permission to launch a private bank. Other public corporations have also formed groups to create their own private banks.

The second category is more ambitious. This sector is the Internet companies that want to build a line of services on their own financial platforms, such as Tencent Technology (Shenzhen) Co Ltd.

Companies aiming to get a pieces of the pie in private banking cover a wide range of industries including e-commerce, real estate, food, garments, electrical equipment, technology and aviation.

Why does private banking look so enticing?

The Chinese banking industry has been enjoying lucrative profitability. According to the half-year profit statements of 2,467 A-share companies in 2013, the total net profits of the 16 listed banks amounted to 619.1 billion yuan ($102.1 billion). up 13.54 percent from the same period last year, accounting for 54.3 percent of total A-share profits. Although profit margins in banks have been decreasing in recent years, the large net profits still have a great appeal to private businesses.

Private banks can ease the difficulties in financing and acquiring loans by private enterprises. According to a study conducted by Qianzhan Industry Research, a Beijing-based research group, a mere 1.3 percent of small and medium-sized enterprises could conduct direct financing. Others accumulate capital through bank loans and private capitalization. However, because of their relatively low credibility, high management costs and banks' preferences for large-scale companies, only 10 percent of SMEs have access to bank credit. It is predicted that SMEs will need 17.5 trillion yuan in capitalization in 2014.

Possible bankruptcy

Severe competition in the banking sector stands in contrast with the private sector's enthusiasm. The profits in the banking industry are highly concentrated. Among the 16 listed banks, the profits of the top five State-owned banks made up 75.5 percent of the total profits in 2012. The total assets of city commercial banks accounted for a mere 9.4 percent of the total assets held by banking financial institutions.

Experts have been applauding the opening up of the banking sector to private capital. However, there are bound to be risks ahead.

Jin Liqun, chairman of the sovereign wealth fund, China Investment Corp, said some of the private banks are bound to go bankrupt.

State-owned banks are not going to go bust because customers are assured their deposits will be safely managed because the central Party and the government will not cheat their own people, said Jin. Private banks, on the other hand, face the risk of bankruptcy. But people don't have to be overly concerned because development comes with risks, he added.

"Deposit insurance needs to be put in place to protect customers' interests in case of bankruptcy," said Jin. "I heard of opposition from large banks that claim the insurance system is nothing but a burden because they are not going to go bankrupt. However, these banks have been given government protection to be exempt from bankruptcy, which attracts customers to put their money into their accounts. What is the cost of establishing an insurance system compared with their vested interests?"

Experts also warn that the current enthusiasm may not pay off.

"Private companies should remain cool-headed before they enter the industry," said Ba Shusong, deputy director-general of the Financial Research Institute of the State Council Development Research Center. He cited a case in Taiwan in which 16 private banks gained approval in 1992, but where only six remain.

Generally speaking, banks see no profits within the first three years after their establishment. Companies should wait until the industry has undergone consolidation before they try their luck.

Bank of East Asia and DBS Bank were the first among overseas lenders that officially opened their sub-branches in the Shanghai free trade zone yesterday, as they were attracted by potential opportunities in China's latest financial reform test bed.

In addition, at least six foreign banks have received the nod from the China Banking Regulatory Commission to prepare for a new outlet in the FTZ. They include Citi, HSBC, Hang Seng Bank, Deutsche Bank, United Overseas Bank and ANZ. The FTZ will allow overseas banks to introduce new services and expand more rapidly in the country, said Geoffrey Choi, assurance leader of financial services at Ernst & Young for China.

Shanghai Pudong Development Bank's net profit jumped 19.8 percent year on year to nearly 41 billion yuan ($6.7 billion) in 2013, according to a filing to the Shanghai Stock Exchange late Friday.

The financial institution is the first listed commercial bank in China to disclose its 2013 results, Shanghai Securities News reported on Saturday.

Earnings per share stood at 2.195 yuan, up 19.8 percent from a year ago, according to the statement. Operating revenue stood at just over 100 billion yuan, up 20.61 percent year on year.

The lender's total assets reached 3.68 trillion yuan, up 17 percent from a year earlier. Its total liabilities stood at 3.47 trillion yuan, up 17.1 percent from a year ago.

The lender's non-performing loans ratio was at 0.74 percent, 0.16 percentage points higher than that at the end of 2012.

Its outstanding deposits totaled 2.42 trillion yuan by the end of 2013, up 13.41 percent from a year earlier. Outstanding loans reached 1.77 trillion yuan, up 14.37 percent from the end of 2012.

Chinese bankers are concerned about credit risks connected to enterprises that are affected by the nationwide campaigns to eliminate outdated industrial capacity and curb local government financing vehicles, said a report released on Monday.

The report, based on a survey by the Chinese Banking Association and Pricewaterhouse Coopers, which polled 1,604 bankers across 31 provinces and municipalities, said 54.5 percent of the surveyed bankers said they believe adjusting the nation's industrial structures may increase credit risks to China's banking system.

Also, 31.6 percent said they believe that nonperforming loan risks are most likely to involve micro-sized and small enterprise loans. Among the bankers, 61.3 percent said the Yangtze River Delta is most likely to face the pressure of increasing NPLS, since the region is host to micro-sized and small company enterprise hubs, which face systemic risks.

Market insiders said loans to micro-sized and small enterprises have been increasingly disputed in the banking industry. While some lenders think such loans may offer new growth opportunities, others have shunned applications for such loans.

"Leaders of banks are torn over the risks of loans" to smaller companies, said a source with a Shanghai-based, State-owned bank.

On the one hand, governments at various levels encourage support from the financial sector to small enterprises to help them grow, and such loans may indeed help them out during hard times.

On the other hand, it is quite risky to make loans under current conditions. In many cases, the applicants do not have guarantees, and they are seeking unsecured loans, said the source, who declined to be identified due to the sensitivity of the matter.

NPLs have been rising in recent months, and they climbed by the largest amount in the third quarter, according to data from the China Banking Regulatory Commission.

Bad bank loans outstanding increased by 24.1 billion yuan ($3.96 billion) to 563 billion yuan at the end of September. But due to swift overall loan growth in the third quarter, Chinese banks' NPL ratios ticked up only slightly.

The system-wide NPL ratio reached 0.97 percent, compared with 0.96 percent at the end of June, the commission said.

About 43 percent of polled bankers said they have been closely watching the risks exposed to debts of local government financing vehicles.

On Dec 10, the central government announced that the performance evaluation of local government officials will no longer be based primarily on economic growth, but rather on sound financial management.

"The change is credit-positive for local governments as well as the central government, because reduced incentives to promote economic growth at all costs will instill fiscal discipline and curb the rapid rise in contingent, quasi-government debt," said Debra Roane, vice-president and senior credit officer of the sub-sovereign group at Moody's Investors Service in a note.

The new evaluation criteria should lead to greater discipline in borrowing. Local officials will be held accountable for their investment and borrowing decisions, including those related to LGFVs, and their handling of these decisions will be a key factor in promotions, said Roane.

The National Audit Office's initial survey of government debt revealed that LGFV debt alone amounted to 10.7 trillion yuan at the end of 2010, or 27 percent of GDP, of which 6.7 trillion yuan was classified as direct debt of local governments.

Moreover, estimates by the International Monetary Fund show a much greater increase and level of debt operationally outside the general government budget.

Deposit and loan margins will likely narrow, though not as much as expected, after the central bank removed a cap on deposit rates as part of its interest rate liberalization, central bank governor Zhou Xiaochuan told Caijing magazine on Tuesday.

Zhou said loan rates likely will rise, along with deposit rates, but uncertainties remain as to whether the rate margin will widen or narrow.

What is certain is that after the liberalization, risk premiums will stay little changed across sectors, and money will be spent more efficiently.

Zhou's comments came after Beijing wrapped up its annual Central Economic Work Conference. A communique issued in the wake of the meeting listed interest rate liberalization as one of the six top economic priorities for next year. In its 60-point blueprint guiding China's reforms over the next decade, Beijing promised the liberalization will be completed by 2020.

The People's Bank of China, the central bank, has been loosening its control over interest rates in recent years as a key part of China's broader market-oriented financial reform. The last remaining control is a ceiling on deposit rates, which analysts believe distorts fund pricing and shelters banks from competition.

The average interest rate margin at Chinese banks was 2.63 percent at the end of September, according to China Banking Regulatory Commission data.

The rate was up slightly over the 2.59 percent seen in the previous quarter.

Zhang Qi, an economist with Haitong Securities Co Ltd, predicted lenders would struggle in the post-liberalization era.

"For lenders, making money will not be as easy," he said.

Zhou said that, barring a crisis, the central bank has no incentive to give financial institutions any special treatment, indicating that it won't shelter banks that are struggling to compete. "In normal times, we hope banks will provide better financial services to the society through competition."

A thinner interest rate margin likely will take a toll on Chinese lenders, whose balance sheets already are laden with bad loans stemming from China's 4 trillion yuan ($654.12 billion) stimulus to save the economy at the height of the financial crisis in 2008.

Chinese banks' share prices already had dropped last year, despite their healthy earnings, as investors feared the effects of interest rate liberalization.

The bank shares' average price-to-earnings ratio, a key measure of valuation, is about 6, compared with 11 in the entire A-share market.

To help the State-owned lenders get through a rough patch, Beijing has been making efforts to strengthen its balance sheets.

In August, Premier Li Keqiang promised to extend a pilot plan to sell bonds backed by bank loans. The bonds will be traded for the first time on exchanges. The move is expected to help banks unload problematic loans.

Last week, China Cinda Asset Management Co Ltd raised 2.5 billion yuan at its listing in Hong Kong, and a bulk of the money will be spent buying up bad assets from the banking industry.

Cinda is one of the four bad debt managers founded in 1999 by Beijing to clear up bad loans from China's State-owned banks. The other three also are expected to raise funds in the near term.

China will officially launch the pilot free trade zone (FTZ) in Shanghai on Sept. 29, taking a solid step forward to boost reforms in the world's second-largest economy.

Preparation work is going smoothly, sources with the Shanghai municipal government said on Tuesday.

Covering almost 29 square kilometers, the zone will be created modeled on existing free trade businesses in the country's economic hub -- Waigaoqiao Free Trade Zone, Waigaoqiao Free Trade Logistics Park, Yangshan Free Trade Port Area and Pudong Airport Comprehensive Free Trade Zone.

Chinese Premier Li Keqiang said earlier this month that for the pilot FTZ, a negative list approach will be explored and priority will be given to easier investment and greater openness.

China's legislature has given the green light to the State Council, or the Cabinet, to modify laws related to foreign enterprises in the zone.

As authorized by the National People's Congress Standing Committee, the State Council will suspend administrative approvals covering foreign-funded enterprises, Chinese-foreign equity joint ventures and contractual joint ventures.

The State Council approved the pilot Shanghai FTZ on July 3. In the pilot zone, goods can be imported, processed and re-exported without the intervention of customs authorities.

Australian fund house AMP Capital could be selling its range of equity, fixed income and multi-asset mutual funds to Chinese investors by February through its new joint-venture with China’s largest insurance company.

AMP will have a 15% stake in the Bejing-based JV, China Life AMP Management, with China Life controllling the remainder. Pending approval from the China Securities Regulatory Commission (CSRC), the JV will begin operations within the next six months, says Anthony Fasso, international CEO and head of global clients for AMP Capital, which oversees A$131 billion ($117.9 billion) in AUM.

Eventually, China Life AMP may consider multiple avenues to invest in the mainland, such as through the qualified foreign institutional investor (QFII) programme, although there are no firm plans at the moment, Fasso tells AsianInvestor.

The firms are focused on receiving authorisation from the CSRC to begin operations in Beijing, he adds.

At the moment, foreign financial institutions can only acquire up to 49% of a JV on the mainland. However, under proposed regulations by the Closer Economic Partnership Arrangement, foreign firms could own over 50% of a JV, allowing them to take a controlling stake.

If passed, this could have a significant impact for firms such as AMP. The firm declined to elaborate on potentially increasing stakes in the future.

“It’s been talked about for some time across many industries but I haven’t seen an update on it,” says Fasso. “We’re happy with the stake we have with the right partner.”

This JV marks the first time a foreign fund house will have partnered a Chinese insurance firm, and follows a new law coming into effect in June allowing mainland insurers to run and sell mutual funds.

Meanwhile, it offer AMP Capital a different means of distribution from the typical channels offered by Chinese banks.

Foreign fund houses seeking to set up an office on the mainland previously partnered with Chinese banks, securities firms or trust companies. The funds are dispensed through the banks’ platforms, which are becoming increasingly crowded.

The big four – Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China and China Construction Bank – account for 70% of fund sales on the mainland.

Insurers, which have large sales forces with both retail and institutional investors, long-term relationships with their clients and extensive data, are an appealing alternative.

“Our mutual funds are primarily aimed at retail investors, so historically they’ve been sold via bank channels,” Fasso says, adding that China Life, with one of the largest distribution platforms in the world, will “open up a broader geographic footprint” for AMP Capital.

“[Chinese insurers] have never sold mutual funds before, so it’s going to take time [before it takes off],” he notes. “But this is a very exciting platform to be involved in.

“Chinese investors are still becoming used to investing in mutual funds. There’s still low penetration. But as they become more sophisticated, they are looking for more choice, particularly around fixed income, equities and multi-asset funds,” Fasso says.

AMP and China Life executives are now working on staffing up the firm’s office in Beijing with executives in sales and marketing, client services, registry and record-keeping, compliance, risk management, finance, operations and regulatory issues.

Once the office is set up with staff later this year, CSRC will do an inspection and then award full authorisation.

Rules remove capital adequacy ratio requirements, limits of equity investment for financial institutions
The Chinese government is loosening its reins on private capital's entry into the banking industry to encourage more lending to small businesses, according to a draft of new rules released by the China Banking Regulatory Commission.
In a statement dated Aug 9, the commission said it has revised rules regarding administrative licenses for Chinese lenders and is seeking feedback from the public until Sept 9.

According to the rules, it has removed the capital adequacy ratio requirements and upper limits of equity investment for domestic financial institutions that will initiate the establishment of a commercial bank.

Instead, it added a requirement that the initiator must possess a good social reputation, have no record of illegal behavior and have no big issues regarding improper internal management.

Zhou Dewen, the chairman of the Wenzhou Small and Medium-sized Enterprises Development Association, said the new rules will further open the door for private capital to enter the financial field because it lowers the threshold for private companies.

He said a large proportion of private capital is in the hands of individuals instead of with an organization that has registered at an administration for industry and commerce, therefore the removal of the previous requirements would facilitate such capital to enter the banking business.

"We noticed the new rules have also added some restrictions, such as private players only using their own capital to hold banking shares, instead of purchasing shares on behalf of others. This is necessary for containing the risks of private banks," Zhou said.

The new rules also loosened the requirements for banks wanting to set up branches in China and overseas by removing the standards for banks' allocated capital for their branch operations during the application.

Lower thresholds to establish a bank in China would encourage some large financial institutions to extend their footprint in small, medium-sized and regional banking services and thus promote financial support for small businesses, said Guo Tianyong, director of the Research Center of the Chinese Banking Industry at the Central University of Finance and Economics.

He said the commission has also increased the capital adequacy requirements for banks' overseas institutions, to prevent overseas risks from spreading to domestic sectors.

On Monday, the State Council, China's cabinet, vowed to improve financial support to small businesses, in a statement released on its website, while the economy continues to falter and the government is curbing over-rapid credit expansion.
The development of small financial institutions will be further encouraged to improve financial services to small businesses - and the threshold at which small companies can raise funds directly on the capital markets will be lowered, it said.

"We would encourage large and medium-sized banks to develop special institutions and outlets for lending to small businesses at a faster pace and improve the scale and standardization of such lending," said the State Council.

The commission figures show that only 45 percent of the total shares of joint-stock commercial banks were in private hands at the end of 2012.

China is stepping up its efforts to get private enterprises into more businesses, said Standard & Poor's Ratings Services in a report published on Monday.

"For the third time since the Asian financial crisis, the country is in the midst of another major push to get private enterprises into more businesses," said Standard & Poor's credit analyst KimEng Tan. "If the reformers prove to be third-time lucky then strong economic growth could continue to be a key sovereign-rating support for the foreseeable future."

The Portuguese bank Millennium BCP (Banco Comercial Português S.A.) yesterday celebrated its new branch in the territory, located at the Finance and IT Center of Macau building, in Avenida Comercial de Macau. In a launching ceremony held yesterday at MGM Macau, the CEO of BCP, Nuno Amado, emphasized the new branch “has more space and provides an excellent environment to further develop businesses.”

With branches in Macau, China, Angola, Mozambique and Poland, the Millennium BCP is hoping to enhance business opportunities within Portuguese-speaking countries. “This new branch allows the further development of BCP not only in Macau, but also in other countries we are represented in,” Amado explained. Nuno Amado revealed there are two main goals and areas of business behind the new branch launch: “We wish to develop our operations within the triangle China-Africa-Portugal, as we have a language and history in common. We also intend to see the Renminbi market evolve, since it is a business which is not that developed yet, so I believe we should focus on this area.” Moreover, he added that “there are more and more Chinese companies investing in Macau, so this is definitely an area where BCP could evolve.”

The CEO of Banco Comercial Português S.A. emphasized that the Macau branch recorded “a significant growth” in 2012, almost tripling the results of the previous year. Following such results, the bank plans to increase its workforce.

“We need to recruit more staff and we are able to expand by having these new facilities,” he added.

Furthermore, Nuno Amado highlighted the role of the Macau branch as a platform “to promote business opportunities between Chinese enterprises and companies in Portugal, Brazil, Angola and Mozambique.” Building a bridge between the East and the West seems to be one of the challenges the Macau branch is ready and willing to face.

The new branch launch ceremony included a ribbon cutting formality with the presence of several personalities, such as Wan Sin Long, a board member of the Monetary Authority of Macau, Vítor Sereno, the Consul General of Portugal in Macau and Hong Kong, the director of Banco Comercial Português S.A., José João Pãozinho, the Senior Assistant Director-General of Economic Affairs Department of Liaison Office of the Central People’s Government in the Macau and Conceição Lucas, the Executive Director of BCP, among others.

Results of Millennium BCP in Macau tripled in 2012

The results of the Portuguese bank Millennium BCP in Macau have tripled in 2012, the director of Banco Comercial Português S.A., José João Pãozinho, revealed yesterday. During the new branch launching ceremony, held yesterday at MGM Macau, the director of BCP announced the bank made MOP 177.7 million in profit, more than MOP 11 billion in deposits and MOP 10 billion in loans. According to José João Pãozinho, “the results have tripled” compared to numbers from the previous year. In his opinion, the great results are mainly the outcome of “a significant growth in the credit portfolio and good results in terms of clients’ deposits.” He concluded saying that “the branch registered extraordinary results following the development of a business platform that Portuguese companies have put in place in Macau and China”.

Growth in China's services sector slowed sharply in April to its lowest point since August 2011, a private sector survey showed on Monday, in fresh evidence that economic revival will remain modest and may be facing wider risks.

The HSBC services Purchasing Managers' Index (PMI) fell to 51.1 in April from 54.3 in March, with new order expansion the slowest in 20 months and staffing levels in the service sector decreasing for the first time since January 2009.

The HSBC services PMI follows a similar survey by China's National Bureau of Statistics, which found non-manufacturing activity eased to 54.5.

"The cooling of service sector activity in April likely reflected the knock-on effect of slower manufacturing growth, the impact of property tightening measures and the spreading bird flu," said HSBC's China chief economist Qu Hongbin.

A reading above 50 indicates activity in the sector is accelerating, while one below 50 indicates it is slowing.

Two separate PMIs last week showed that China's manufacturing sector growth had slowed, suggesting the country's exports engine is running into headwinds from the euro zone recession and sluggish growth in the United States.

In the latest survey, the sub-index measuring new business orders dropped sharply to a 20-month low of 51.5 in April, with only 15 percent of survey respondents reporting an increased volume of new orders that month, HSBC said.

"Again, this started to bite employment growth. All these are likely to add some risk to China's growth in 2Q, as there's still a bumpy road towards sustaining growth recovery," Qu said.

The employment sub-index decreased to 49.6 in April, the first net reduction in staff numbers since January 2009, although HSBC said job losses were marginal, partially caused by firms down-sizing and employee resignations.

Employment is a decisive factor shaping government thinking because it is crucial for social stability. The services sector accounted for 46 percent of China's gross domestic product in 2012, as big as the country's better-known manufacturing industry.

At the depth of the global financial crisis in 2008/2009, an estimated 20 million rural migrant workers lost their jobs, prompting Beijing to unveil a 4 trillion yuan stimulus package to shore up the economy and provide employment.

China's annual economic growth dipped to 7.4 percent in the third quarter, slowing for seven quarters in a row and leaving the economy on course for its weakest showing since 1999.

The government has set a 2013 growth target of 7.5 percent, a level Beijing deems sufficient for job creation while providing room to deliver reforms to the economy.

The People’s Bank of China (PBOC) announced on March 16 that it had re-appointed Zhou Xiaochuan as the chief of China’s central bank, making Zhou the longest-serving central bank chief since the establishment of the People’s Republic of China. The re-appointment of Zhou, who has held the position since 2002, signals the country’s bid to ensure policy continuity amid current global uncertainties, while deepening the country’s on-going financial reform.

Before the reassignment, Zhou and three other deputy governors of the PBOC attended a press conference regarding China’s monetary policy and financial reform on March 13. Selected questions and answers from the press conference can be found below.

Q: What kind of monetary policy will China’s central bank adopt?

A: China’s monetary policy mainly seeks to accomplish the following four objectives:

* Keeping low inflation
* Facilitating economic growth
* Encouraging employment
* Balancing international payments
* Where the four objectives are unable to be accomplished simultaneously, the central bank needs to adopt a monetary policy that can draw a balance among the four purposes.

In the Government Work Report presented by Premier Wen Jiabao, he suggests the country set its 2013 GDP growth at 7.5 percent, and the target for inflation (as measured by the CPI) at 3.5 percent. Meanwhile, the broad money supply (M2), which covers cash in circulation and all deposits, is suggested to grow by 13 percent.

The proposed growth of M2 is lower than that of last year, indicating that the monetary policy will stay prudent and neutral, and meanwhile, the government will put more emphasis on keeping consumer prices stable.

Q: Will China’s M2 growth present an inflation risk?

A: Countries with high savings rates and a heavy reliance on indirect financing usually have high M2 growth, which is the case with China. However, the high M2 to GDP ratio will not necessarily create an inflation threat. Japan, for instance, has an even higher ratio than China, yet still suffers from deflation rather than inflation.

For the central bank, stabilizing consumer prices is its first priority, the M2 figures will not necessarily put consumer price stability in jeopardy. If the growth of M2 can be controlled at a reasonable level, it won’t lead to sudden price hikes.

Q: Will the central bank support Taiwan to become an offshore RMB market?

A: The People’s Bank of China and the currency administration institution of Taiwan signed the Cross-Straits Cooperation Memorandum in Currency Settlement on August 31 last year. According to the Memorandum, financial institutions on both sides could undertake currency settlement through a correspondent bank or a clearing bank. The two sides may also discuss a currency swap agreement if cross-Strait trade demands a higher level of financial cooperation.

However, whether Taiwan will become an offshore RMB center needs to be decided by the market. Some important financial centers might become offshore RMB trading markets in the future as a result of market demands and competition.

Q: Will the central government provide a better environment for the opening of capital accounts? Are there going to be any adjustments on the opening schedule?

A: The Global Financial Crisis has created a special opportunity for the rapid growth of the cross-border usage of RMB in trade and investment, which is mainly due to a confidence crisis with the world’s major currencies, and closer regional cooperation between China and other economic entities.

With the development of cross-border usage of RMB, there will be greater demand for the exchangeability of RMB under capital accounts. However, making the RMB convertible under capital accounts is quite complicated. China has been pursuing the free exchange of RMB since 1993. Currently, the RMB has become convertible under current accounts, and its convertibility under capital accounts will be promoted step by step.

It is also important to notice that the convertibility of RMB under capital accounts will not only help promote RMB internationalization, but will also boost the development of an open-market economy in the country and strengthen confidence of domestic and foreign investors in the Chinese currency.

Morgan Stanley plans to slash 1,600 jobs in what may be just the beginning of a new round of layoffs at large investment banks, this time driven by a deeper reassessment of Wall Street businesses in the face of new regulations and capital standards.

Morgan Stanley, the sixth-largest US bank by assets, plans to begin letting go of the employees, many of whom work in its securities unit, starting this week, two people familiar with the matter said.

A third person who has been involved with plans to cut staff at Morgan Stanley and other large banks said that Morgan Stanley’s cuts had been in the works for months, and that more are expected in the future.

Large global investment banks have been cutting staff for the better part of five years, when the financial crisis pegged to the US housing market began to seize up markets.

Firms previously focused their job cuts on areas where activity had screeched to a halt, such as securitization of mortgages, or that were explicitly banned by new regulations, such as proprietary trading.

But banks are now making strategic decisions about businesses in grey areas where management teams do not see major profit potential, or realize that their individual banks are not competitive, the third source said.

“It’s hard to look at yourself in the mirror, and say: ’I’m not good at this,’” said the source. But now that management teams are coming to those realizations, he said, they are beginning to make strategic decisions to exit businesses and cut more staff.

So far, the most prominent example of a bank making that kind of a tough decision is Swiss bank UBS, which said in October that it would exit bond trading altogether and eliminate 10,000 jobs.

Morgan Stanley has said it will not give up on the fixed income, currency and commodities trading business, known as ”FICC” in Wall Street circles. The firm has said it wants to boost market share in FICC by two percentage points.

But Morgan Stanley is aiming to exit more complex realms of bond trading that require more capital under new regulations.

The latest staff reductions will affect 6 percent of the institutional securities unit’s workforce, which includes the bank’s FICC business. The cuts will target salespeople, traders and investment bankers, the sources said. Support staff who work in areas such as technology will also be affected, the sources said.

Although all staff levels will be affected, the likely targets will be more senior employees who take in the biggest paychecks, and about half of the cuts will come from the United States, one of the sources said.

The cuts are also notable because, unlike its chief rival Goldman Sachs, which culls the bottom 5 per cent of its workforce each year to improve performance, Morgan Stanley does not have such a staff reduction program.

Some analysts have questioned Morgan Stanley’s plans to gain market share in the bond trading business.

JPMorgan analyst Kian Abouhossein - who earlier said that Morgan Stanley should give up that goal - expects Wall Street banks to report a 10 per cent decline in revenue for the fourth quarter, compared with the previous period.

Bernstein Research analyst Brad Hintz, a former Morgan Stanley treasurer, said in a report on Wednesday that layoffs are expected in capital-intensive areas of Morgan Stanley’s fixed-income trading business, such as asset-backed securitization, synthetic products, structured credit and correlation trading.

“Investors continue to wonder how Morgan Stanley’s fixed income business will be able to generate steady returns and beat its cost of capital without massive changes to its business model,” Hintz said.

Morgan Stanley chief executive James Gorman has pledged to cut costs, and said in July that he planned to reduce overall staff 7 per cent in 2012. The new job cuts are in addition to that plan, the sources said, and come just a week after Colm Kelleher took over as the sole president of the securities unit on January 1.

The cuts represent less than 3 per cent of Morgan Stanley’s entire estimated workforce at year-end, following other staff reductions in 2012.

“This continues the steady drumbeat of negative news from banks,” said Greg Cresci, a Wall Street recruiter with New York-based Odyssey Search Partners. “It’s hard to tell where the bottom is, given how many banks have made similar announcements.”

Altogether, US financial firms announced plans to reduce payrolls by 38,135 jobs last year, in addition to 63,624 job cuts that were detailed in 2011, according to employment consulting firm Challenger, Gray & Christmas.

“We are seeing a redrawing and restructuring of the industry,” said John Challenger, chief executive of the firm. “The map continues to be redrawn in terms of regulation, who the competitors are, and the resources banks are willing to commit to the investment banking business.”

In addition to earlier job cuts at Morgan Stanley and UBS, Goldman Sachs cut 700 jobs during the first nine months of 2012 as part of a plan to reduce annual expenses by US$1.9 billion.

Citigroup announced plans last month to cut 11,000 jobs, including some in investment banking and trading, to save US$1.1 billion in annual expenses. Credit Suisse Group is also cutting securities jobs to reach an annual cost-savings target of 1 billion Swiss francs (US$1.1 billion), while Bank of America is in the process of cutting 30,000 jobs across the firm in a plan unveiled in 2011 to save $5 billion in annual expenses.

Morgan Stanley shares fell 0.2 per cent to close at US$19.62 on Wednesday. Its shares are up 15 per cent over the past 52 weeks, part of a broad rally in financial stocks.

Insiders in China Merchants Securities (CMS) confirmed that the securities firm is carrying out a 5 percent elimination to the last, according to the Financial Weekly. Some investment bank employees have been transferred to other departments. And some investment bank staff who didn’t accept job transfers chose simply to leave. The timing of transfers and layoffs relates to many sponsor representatives and quasi-sponsor representatives.

This is the first time CMS has had to lay off personnel. A person working in the investment bank department of the securities firm said that mainly new staff have been fired, so there’s not so much obstruction towards the redundancy.

Different from other securities firms, the redundancy of CMS only focuses on the investment banking department. Currently, there are 300 people working in that department in CMS. With a 5 percent layoff ratio, it is estimated that around 15 people will be leaving.

Disclosed by the official website of the China Securities Regulatory Commission (CSRC), CMS has 82 sponsor representatives. But it has only seven IPOs, with three additional programs were completed this. If each sponsor representative signs one contract, which represents the lowest efficiency of the human resource use, a maximum of merely 20 sponsor representatives have been engaged in projects. The rest of the 62 sponsor representatives had no output, which may make it difficult to recoup their 100 million yuan annual salaries.

SHANGHAI/HONG KONG: International banks in China find themselves stuck between a rock and a hard place as the battle for top-tier talent on the mainland leaves them facing a stark choice: either pay exorbitant salaries and benefits or lose their best people to competitors at a head-spinning rate.

China last year overtook Japan as the world's second-biggest economy and the country is positioning itself for a record fundraising boom to fuel its next stage of growth.

The financial market has experienced explosive growth in the past two decades. China now has more than 2,000 listed companies and the world's second-biggest stock market capitalisation, according to Thomson Reuters data. But the pool of financial talent has not expanded as fast, industry players say.

Heady expansion by JP Morgan , UBS and others has aggravated the problem.

JP Morgan aims to have "several thousand bankers eventually" in Asia, Gaby Abdelnour, JP Morgan Asia Pacific CEO, told Reuters Insider this week.

Talent management will be the biggest challenge for the next five years, Abdelnour said. "Guess what? We will be hiring and we will be losing people along the way because everybody else is hiring."

Competition for qualified candidates has driven up wages so much that the gap between salaries of mainland financial executives and their peers in other more advanced financial hubs such as Hong Kong and Singapore, are fast narrowing.

Salaries have increased on average by 20 percent this year for candidates taking new jobs within the financial services industry in China, according to the British recruitment group, Hays Plc .

Newly hired analysts in China are being offered 180,000-240,000 yuan per year while senior-level executives can expect offers of up to 1 million yuan ($153,060) a year. Bonuses for the lower-tier employees range from 15 to 25 percent of the base salary while senior executives are normally tied to performance targets, according to headhunters.

"Companies that are not giving competitive pay rises have to face serious turnover issues," said Emma Charnock, Hays' regional director for Hong Kong and China.

Hays recently helped a Beijing-based investment bank client secure a new hire from Hong Kong to fill a mainland financial controller's job after the client agreed to pay 40 percent more than what the candidate was getting in Hong Kong, Charnock said.

"There's a lot at stake. If they can't find the right candidates, their expansion plans could be inhibited. It will have a direct knock-on effect to their expansion in China," said Charnock, referring to international banks in China in general.

Another foreign company took the trouble to outline its growth plan in China over the next three to five years and promised a clear career plan for its financial controller candidate before the candidate signed on, she said.

FAST GROWTH CLSA Asia-Pacific Markets estimates fundraising on China's two stock exchanges will reach 700 billion yuan ($107.1 billion) a year, pushing the A-share market cap to 17 trillion yuan by 2015 and making it possibly the largest market in the world.

Shanghai, which aspires to become an international financial centre by 2020, is preparing an international board on the Shanghai Stock Exchange to allow foreign companies to list on the mainland.

China has also slowly opened its capital accounts and encouraged more cross-border financial products because it wants to raise the global profile of the yuan .

Global banks, salivating at the growth potential, are tapping overseas Chinese, popularly known in China as "returnees," from Asia to Europe and the United States to deal with the small local talent pool.

"There are not many people who fully understand China, fully understand finance and fully understand international practice. So if you use those three priorities, the talent pool is not that big," said David Li, chairman and country head for China at UBS.

The huge growth potential attracted Sun Wei, 25, after she finished her master's degree in accounting and finance at an Australian college last year.

"China's economy is growing very fast. The upside potential is huge," said Sun, now working at a big-four accounting firm in Shanghai. "I have more opportunities here than abroad," she said.

Another banker, Cheng Bing, joined BNY Mellon in March to lead its new trading floor in Shanghai after the U.S. bank was awarded a license to conduct local-currency business in China. He had been a senior executive at DBS Shanghai .

He said that it is not a challenge to find junior traders in China, where trading instruments are relatively basic and fundamental in nature, but it is a challenge to source senior talent.

"Finding senior-level talent with international expertise and local understanding is a challenge for many foreign banks," Cheng said. "In China, policies change a lot and you need to adapt to that."

Cheng also said a higher salary was not the main driver of his move, but the prospect of a better career.

INNOVATIVE CAREER PATH For overseas financial professionals who already have a solid career, however, any decision to relocate to China is not so straightforward.

It often means moving from a stable, sophisticated and exotic market to one that is less certain, primitive and one-dimensional, said a recruitment specialist and a Hong Kong-based banker.

"A private banker, for example, would be unhappy to move from an advanced platform to a basic platform, even if you offer him or her a larger geographical split," said Richie Holliday, a recruitment consultant with Morgan McKinley , a European headhunting company that recently set up a new office in Shanghai.

China's foreign exchange controls, regulations and an underdeveloped derivatives market limit the range of products private bankers can offer their clients, industry players say.

Uncertainties surrounding the country's regulatory environment and the slow progress of its capital market liberalisation have also discouraged many potential recruits.

"There are still a lot of restrictions and uncertainties in China's capital markets. You are not sure what your business will be like in one or two years," said Alexandre Werno, China business development director of global markets at Societe Generale in Hong Kong.

"If you are a trader and you are based in mainland China, you face a single market which is not very developed," Werno said.

The fact that foreigners will be subject to higher personal income tax rates does not help either. The 45 percent maximum tax rate for foreigners in Shanghai, for example, is significantly higher than the 17 percent rate in Hong Kong and the 20 percent rate in Singapore.

Desperate to attract and retain new talent, international financial institutions in China are embracing more creative and flexible talent management practices and a fast-track to top jobs.

Morgan Stanley's recent decision to promote its top China banker, Wei Christianson, to be joint-chief for its Asian business is seen as a classic example of how China's growing importance has raised the status of Chinese bankers.

"Some banks still consider Beijing as a hardship posting so they have to think around the box," said Charnock of Hays.

"Usually it's an innovative career path. We have seen candidates take up much more senior roles than they would do in some other financial hubs to attract them back," she said.

NEW YORK (Reuters) - Citigroup Inc plans to almost triple its workforce in China by hiring up to 7,500 people in the next three years, an executive told Bloomberg in an interview published on Tuesday.

Citigroup, which has 4,500 employees in China, will hire more in that country that in any other Asia-Pacific market, according to Bloomberg's interview with Stephen Bird, Citigroup's co-chief executive officer for the region.

The hiring plans will support Citigroup's efforts to expand in the region and compete with HSBC Holdings PLC and Standard Chartered PLC .

Bird told Reuters last week that Citigroup planned to open two branches a month on average in China for the foreseeable future, the maximum allowed by regulators.

The company's strategy "is progressively more weighted to emerging markets," Bird told Reuters. "Greater China is the future."

Citigroup plans to double its number of branches in Hong Kong to 50 by the end of the year and increase the number of branches on the mainland to 38 by the end of the year, from 29 currently.

A Citigroup spokesman did not immediately respond to a request for comment on Tuesday. The company's shares were trading up less than one percent, at $3.70, by mid-afternoon.

China Investment Corp., the nation’s sovereign wealth fund, is starting a new round of international hiring to meet its “business development needs,” according to a statement today on its website.

The company is offering 64 positions from asset allocation to private equity investment, with jobs posted on its website.

The $300 billion fund will seek a “more flexible” investment strategy this year as global markets didn’t show a clear trend, Executive Vice President Jesse Wang told reporters in Beijing in March. The company earlier this month sold 5.1 million shares in Morgan Stanley after the stock rallied.

CIC is likely to report a return on its global portfolio “well above 10 percent” for 2009, according to Rachel Ziemba, London-based senior analyst at Roubini Global Economics, after it accelerated investments in commodity-related companies.

CIC in June, 2009, provided vacancies for 33 categories in 13 departments. The company had about 200 employees, according to its 2008 annual report released Aug. 7 last year.

HONG KONG -- Hong Kong banks and financial-services companies are leading the way as the city's employers step up hiring and say they are willing to pay more money to retain staff, according to a report by a recruitment firm.

The survey of about 500 company executives found 59 percent plan to hire for new positions in the second quarter, compared with 14 percent a year earlier, Hudson Global Resources (Hong Kong) Ltd. said. Hudson said 73 percent of employers in banking and financial services expect to hire more workers.

Hong Kong's jobless rate fell to a 15-month low in the first quarter, supporting consumption and economic growth, as the “labor market remains robust,” Matthew Cheung, secretary for labor and welfare, said last month. HSBC Holdings Plc, China Construction Bank (Asia) Corp. and BOC Hong Kong (Holdings) Ltd. have recently said they are hiring.

“Along with a recovering economy, with improvements becoming more broad-based, we expect the jobless rate will drop further this year,” Kelvin Lau, Hong Kong-based economist at Standard Chartered Plc, said Thursday in a phone interview.

Two-thirds of respondents said they are willing to offer more money to employees trying to leave for another company, Hudson said. More companies raised salaries in the first quarter than a year earlier, the Hong Kong Institute of Human Resource Management said May 10, citing the results of another survey.

Hong Kong's economy grew for nine consecutive months through December after a year-long recession. It reports first- quarter economic data tomorrow.

HSBC is joining rivals including Standard Chartered in expanding businesses that target wealthy clients in the region. HSBC aims to recruit more than 300 relationship managers and sales staff in Hong Kong in “a fairly competitive market” for hiring as competitors are also looking for talent, Francesca McDonagh, head of personal financial services for Hong Kong at HSBC, said last month.

China Construction Bank (Asia) , a unit of the country's second-largest lender, plans to hire as many as 400 people in Hong Kong this year as the bank opens about seven more branches in the city. BOC Hong Kong and its units are seeking to employ 200 people, the company said in April.

“The job market recovery remains strong,” said James Carss, a Hong Kong-based general manager at Hudson, in the report released earlier this month.

China International Capital Corporation (CICC), the leading international investment bank in China, is hiring for its asset management department and retail group in second tier cities.

Recent recruitment activity indicates that the firm is trying to fill positions such as investment consultant, channel marketing and sales, and retail customer services in order to develop and maintain relationships with local distribution-channel customers, institutional clients and high-net-worth individuals.

Headquartered in Beijing, CICC also has offices in Shanghai, Hong Kong and Shenzhen. Much of its recently posted recruitment, however, is for its expanding business in cities such as Chengdu, Guangzhou, Qingdao, Xiamen, Hangzhou, Nanjing, Wuhan and Chongqing.

Considered an elite employer within the Chinese banking sector, on a par with major international banks, CICC sets a high threshold for applicants, even in these second-tier centres.

According to the firm’s website, for an entry level position of investment consultant at its retail group in Chengdu, candidates must have “solid sales-related experience in multinational companies, preferably having been involved in securities sales,” as well as a “master degree in relevant majors, preferably an MBA from renowned universities”.

And these aren’t just paper promises. A new recruit to CICC’s asset management department in Shanghai, who asked not to be named, says most of his colleagues are graduates from leading MBA schools, such as CEIBS, and top universities like Fudan and Jiaotong.

CICC defines itself as a "meritocracy”, which means that ability and talent are rewarded above all. Hiring falls into three main categories: lateral (experienced professionals), campus (fresh graduates) and summer internships.

“For senior level positions, CICC prefers hiring those who have work experience at well-known investment banks, such as Merrill Lynch and JP Morgan. CICC is also hiring overseas returnees for specific positions such as fixed income and structured products,” says Stephen He, a banking and finance division senior consultant at Randstad China.

SHANGHAI—Industrial & Commercial Bank of China Ltd. said Monday it appointed the chairman of Deutsche Bank AG's China operations as a vice president.

ICBC, China's largest commercial bank by assets, has been expanding its footprint outside its home market since it raised $22 billion in the world's largest initial public offering in 2006, such as through acquisitions and by opening outlets.

ICBC said the appointment of Zhang Hongli, who also served as head of the Asia-Pacific region for Deutsche Bank's Global Banking division, is still subject to the approval of China's banking regulator.

"The board of directors is of the view that Mr. Zhang Hongli is familiar with international financial markets and circumstances of the country and is experienced in the management of international banks," ICBC said in a statement on the Hong Kong Stock Exchange's Web site.

Mr. Zhang, 45 years old, joined Deutsche Bank in 2001. Prior to that, he worked for Goldman Sachs Group Inc., U.K. asset management firm Schroders PLC and computer maker Hewlett-Packard Co.

Officials at Deutsche Bank in China weren't immediately available for comment.

Deutsche Bank is the largest shareholder of medium-sized Hua Xia Bank Co., with a 17% stake. The German lender also owns one-third of Zhong De Securities Co. and 30% of Harvest Fund Management Co.

In September, ICBC agreed to buy part of ACL Bank PCL in Thailand. In 2007, it bought a 20% stake in Standard Bank Group Ltd., South Africa's largest banking company by assets, for $5.4 billion. That same year, it also bought a 79.93% stake in Seng Heng Bank Ltd., Macau's third-biggest bank, and a 90% stake in Indonesia's PT Bank Halim.
—Rose Yu

By SIOW LI SEN

DBS Group Holdings will be hiring 20 per cent more people for its business in China which currently employs 1,000 staff.

'Amid the significant wealth creation that rapid growth brings, this year, DBS China will ramp up its priority banking business, which caters to customers with at least RMB 400,000 in investible assets,' the bank said Tuesday.

DBS has been expanding rapidly in China - Asia's fastest growing economy for the last decade - and is competing fiercely with other foreign banks to increase its presence.

DBS forecasts that China's economy will expand 9.5 per cent this year.

HSBC China said this month the company expects to add 19 new branches this year to its existing 99 outlets, according to a Reuters report.

DBS China currently operates out of eight branches and seven sub-branches across China, has applied to regulators to open more branches, the bank said.

'DBS China also intends to add about 200 staff to its existing headcount of close to 1,000 employees this year,' it said.

More than half of the recruits will be for client-facing roles in priority banking, with the rest slated for positions in institutional banking, treasury and markets as well as support units to keep pace with rapid business expansion, it said.

DBS Bank, Southeast Asia's largest bank will commit over $1.5 million in the upcoming World Expo 2010 to raise its brand presence, it said.

Starting in June, the six-month World Expo which has drawn participation from 200 nations is expecting an estimated 70 million visitors.

Bank of America Corp. said it’ll expand its China business and hire more staff to tap growth in the world’s most populous nation, according to its chief executive officer Brian Moynihan.

“We are committed to our business here, not just the capital, more importantly the human capital,” Moynihan said during a press event today in Beijing.

Raymond Ma

It seems that every foreign bank wants to be top dog in China’s wealth management sector – and for good reason. When Forbes magazine published its list of the richest people in the world earlier this month, it singled out China for mention because it was the first year in which the country had the most number of billionaires outside the US.

“China is currently considered the most attractive wealth management market in Asia for international banks. The country has experienced very fast growth for an extended period, and this has helped to create a whole new generation of wealthy individuals,” says Harry Senlitonga, a senior analyst at research firm Datamonitor.

The most active foreign recruiters in China’s wealth management sector include UBS, Credit Suisse, Deutsche Bank, HSBC and Citi, according to a private banking headhunter who asked not to be named.

An increasing number of roles advising clients in China are expected to be based in Shanghai, rather than Hong Kong, which has traditionally been the hub for China-focussed relationship managers, adds the recruiter.

But while mainland vacancy volumes in wealth management are rising, the massive potential of this sector is yet to translate into a full scale talent war.

“I think recruitment for relationship manager roles has picked up slightly since the second half of 2009, but they are still nowhere near what I would call aggressive,” comments Cherol Cheuk, director of banking at recruitment firm Hudson.

Much of China’s wealth was created relatively recently, so the private banking industry is still undeveloped. Many rich individuals are unaware of wealth management models and/or unwilling to pay a professional advisor to help them invest their funds.

It is also difficult for banks to find the talent they need to expand their wealth management businesses on the mainland, adds Cheuk. Firms favour Chinese candidates who have strong relationships with small and medium business owners and entrepreneurs.

Raymond Ma

Welcome to the first of our weekly updates on the financial services job market in China.

It’s again that time of year when the most frantic job switching among front-office investment bankers takes place, and this is the case in China as much as anywhere else in the Asia.

Recent high-level mainland moves include HSBC’s appointment of Jane Wang – previously vice chairman for China investment banking at Nomura – as China chairman for corporate finance.

Meanwhile, Bank of America Merrill Lynch has reportedly hired former Goldman Sachs Beijing executive director Edmund Sim as its new director of China equity capital markets. Finally, Lee Zhang, China head at Deutsche Bank, has reportedly resigned from his current post to take up a senior role at the Industrial and Commercial Bank of China.

“This is the musical chairs season,” comments CK Wan, a senior client partner at search firm Korn/Ferry International. He says with most firms typically paying bonuses between January and March, bankers – who are unhappy with their jobs or are being lured away by competitors – are making a beeline for the door.

Poor capital markets have suppressed job-hoping activity in the last two years – in China as in most parts of the world – resulting in pent-up demand among bankers to move once there is an opportunity, says Richie Holliday, managing director for recruitment firm Morgan McKinley in Hong Kong.

“The volume of jobs we are aware of has increased hugely in the last 12 months, and most of that actually happened in the last quarter,” he adds.

Holliday expects investment banking vacancies to spike later this year, before settling back to more steady levels. All this bodes well for i-banking candidates – if they seize the moment.

“It means if you are an associate vice president somewhere, there is going to be an opportunity for you to make vice president quicker. It will mean a larger remit and broader responsibilities, which you would have had to work longer for a couple of years ago, or a couple of years hence,” says Holliday.

Compared with last year, when talent in China was snapped up by boutique and local investment banks, much of the hiring will be done by large multinational banks that are seeking to rebuild their revenue streams in Asia., he adds. Sales, trading and advisory roles will be most in demand this year.

Korn/Ferry’s Wan, who expects the current round of movement in investment banking to continue for another two months, adds that firms are on the lookout for bankers with deal origination and execution skill sets.

By Cathy Chan

March 17 (Bloomberg) -- HSBC Holdings Plc, Europe’s biggest lender, hired former Nomura Holdings Inc. executive Jane Wang to bolster investment banking in the world’s fastest-growing major economy, two people with direct knowledge of her plans said.

Wang, 42, will become China chairman for corporate finance in a newly created position and start in early April, the people said, asking not to be identified before an announcement. She will report to Liu Che-Ning, 44, the head of global corporate and investment banking in Hong Kong and China, they said.

The executive is HSBC’s second senior hire in six months in China, the world’s biggest market for initial public offerings in 2009. Liu, a former managing director at Morgan Stanley, joined HSBC in October.

HSBC ranks fourth in arranging overseas stock sales by Chinese companies this year, up from 16th in 2009, according to data compiled by Bloomberg. Before this year, the bank’s highest ranking in the past decade was eighth.

The London-based bank doesn’t have a license to underwrite domestic share sales in the country, lagging behind rivals including Goldman Sachs Group Inc., UBS AG and Credit Suisse Group AG.

Annie Cheng, a spokeswoman at HSBC in Hong Kong, declined to comment. The company, set up in 1865 as the Hongkong and Shanghai Banking Corp., plans to trade its shares in Shanghai and moved Chief Executive Officer Michael Geoghegan to Hong Kong from London last month to sharpen its focus on Asia.

Lehman Takeover

Wang, who joined Nomura through the takeover of Lehman Brothers Holdings Inc.’s Asia operations in 2008, resigned last week from the Tokyo-based brokerage as vice chairman of China investment banking, people with knowledge of the matter have said. She will be based in Hong Kong with HSBC.

She joined Deutsche Bank AG in 2000 and was promoted to co- head of China investment banking in 2004. Lehman hired her the following year as head of China corporate finance. During her stints at Deutsche Bank and Lehman, she helped win work arranging share sales for Dongfeng Motor Group Co. and China Citic Bank Corp.

HSBC was hired to underwrite Bank of Communications Ltd.’s rights offer of as much as $6.15 billion, and won a role arranging the initial public offering of Swire Pacific Ltd.’s property unit this year, one of the people said.

Banker Departures

HSBC tried to expand its investment bank under co-heads Stuart Gulliver and John Studzinski as part of a five-year plan that started in 2003. Studzinski added about 1,400 people to the corporate and investment bank in 2005, increasing expenses and contributing to the unit’s decline in pretax earnings.

After Studzinski left in 2006, HSBC scaled back its ambitions to focus on a narrower range of securities services targeting emerging markets. Studzinski joined Blackstone Group LP and hired HSBC bankers including Zheng Jianping and Jing Xiaowen in 2008.

The U.K. bank lost senior bankers hired in Asia in 2007, including Asia CEO Michael Smith; Daniel Palmer, global head of capital markets; and Steven Wallace, Asia investment banking head. Smith became CEO of Australia & New Zealand Banking Group Ltd.

HSBC’s posted full-year net income of $5.83 billion, missing the $7.76 billion median estimate of analysts surveyed by Bloomberg. Pretax profit at the investment banking unit, led by Gulliver, more than tripled to $10.5 billion. It was the only among HSBC’s divisions to report a gain in profit.

The lender wants to raise more than $5 billion in Shanghai as China opens the exchange to foreign companies, people with knowledge of the matter said in August.

Lee Zhang set to become ICBC's vice president

* Zhang's appointment subject to Beijing's approval

* China wants influential Chinese to return to help SOEs

* Deutsche Bank shares up 0.3 pct in line with peers

(Adds sources' quotes, more details, background)

By George Chen and Zhao Hongmei

SHANGHAI/BEIJING, March 19 (Reuters) - Lee Zhang, China head of Deutsche Bank AG (DBKGn.DE), Germany's top lender, is set to take a senior role at Industrial & Commercial Bank of China (1398.HK), according to people familiar with the matter.

The sources said the appointment is expected to receive final government approval in the next few weeks, part of Beijing's plan to attract influential Chinese away from leading Western firms to drive expansion inside major state-owned enterprises.

Zhang has been in talks for several months with senior Chinese government officials and the management of ICBC.

"There will be more to come back as Beijing is eager to push the trend," said one of the sources.

"It does make sense for big enterprises like ICBC. You are already the No. 1 in the world (by market value) and of course you also need No. 1 talent to work for you," he added.

The departure is a blow for the Frankfurt-based lender which in December unveiled ambitious profit targets to reach 10 billion euros in pretax profit by 2011, in part based on its ability to drive revenue growth in Asia.

Deutsche wants to raise revenues in Asia Pacific excluding Japan to around 4 billion euros by 2011 from around 2.1 billion euros in 2008, mainly by focusing on organic growth. [ID:nWEA5547] [ID:nWEA5552]

Deutsche already has a joint venture in China with Zhong De Securities, with plans to reach a market share of 5 to 8 percent within three to five years. It recently raised its stake in Hua Xia Bank (600015.SS). [ID:nSHA137769] [ID:nSHA199464]

The sources said Beijing-based ICBC (601398.SS) agreed to hire Zhang as its vice president, but the appointment must be approved by the Organization Department of the Communist Party of China (CPC) Central Committee, a process that could still take several weeks.

Sources at Deutsche Bank told Reuters that Zhang is still working in the bank this week. Spokesmen at ICBC and Deutsche Bank declined to comment on the matter. Zhang's mobile phone went unanswered.

The sources declined to be identified because the hiring process is private and confidential.

WELCOME TO BEIJING

Zhang, a long-time banker for Western financial institutions, helped Deutsche Bank launch its investment banking joint venture in China, allowing the European lender to help Chinese clients underwrite shares and debt in fast-growing domestic markets.

Zhang, Group Chairman of Deutsche Bank China and Head of Global Banking Asia-Pacific excluding Japan, also helped Guangdong Development Bank, a mid-sized Chinese lender once in deep financial trouble, to strike a $3.1 billion deal with a Citigroup-led (C.N) consortium in a landmark foreign banking investment in China in 2006.

In Beijing, Zhang is already well known among top Chinese leaders since he is a delegate to the Chinese People's Political Consultative Conference (CPPCC), China's top political advisory body.

As a CPPCC delegate, an honoured political status very rarely offered to Chinese people working for Western firms, Zhang has opportunities to meet top government leaders and regulators annually and submit proposals on a variety of issues. If his appointment is approved, Zhang would be the highest profile executive to be lured to a state-owned company under Beijing's plan to lure top talent from Western banks.

Many Western banks were badly hit during the global financial crisis, and even influential bankers whose compensation has come under public scrutiny may be more open than previously to outside offers.

Meanwhile, China's fast economic growth has helped big banks such as ICBC grow even more and they are now ambitious for global expansion, providing opportunities for veterans such as Zhang.

Last week, Fred Hu, a high-profile Chinese dealmaker, stepped down as a partner of Goldman Sachs (GS.N) after 13 years with the firm to launch a new private equity fund with help from China Construction Bank (0939.HK) (601939.SS), another of the Big Four state lenders, and other parties. [ID:nTOE6290BD]

Shares worth $5.01 trillion changed hands on the Shanghai Stock Exchange in 2009, compared with $4.07 trillion on the Tokyo Stock Exchange

By Zhang Shidong and Shiyin Chen

(Bloomberg) — Shanghai overtook Tokyo as Asia's biggest stock market by trading value last year, as an 80 percent jump in China's benchmark index boosted equities demand.

Shares worth $5.01 trillion changed hands on the Shanghai Stock Exchange in 2009, compared with $4.07 trillion on the Tokyo Stock Exchange, according to data compiled by Bloomberg. The Shanghai and Tokyo exchanges were ranked third and fourth globally, the Nikkei newspaper reported, citing the World Federation of Exchanges. Only the Nasdaq stock market and the New York Stock Exchange had higher trading volumes than Shanghai.

"As an emerging market, China has a very high ratio of stocks changing hands," said Li Jun, a strategist at Central China Securities Holdings Co. in Shanghai. "Increased new share sales are also one reason behind the high turnover. It'll probably take one year or two for China to catch up with the world's biggest."

The Securities Regulatory Commission on Jan. 8 approved short sales, stock index futures and margin trading. Morgan Stanley said the reforms may boost transaction volume by 50 percent, helping to usher China's market into a "new era."

The Shanghai Composite Index rebounded last year from a 65 percent loss in 2008 after the government introduced a 4 trillion-yuan ($585.9 billion) stimulus package, encouraged banks to advance record loans and subsidized individual purchases of cars and home appliances. Japan's Nikkei 225 Stock Average rose 19 percent.

Shanghai has the world's third largest stock market by market capitalization, briefly overtaking Tokyo in July 2009. New York is the biggest by market cap.

Mainland companies raised 207.6 billion yuan from initial public offerings in 2009, double from the previous year, according to Bloomberg data.

AMD and distributors to pilot IBM's new financing capabilities in the region

TIANJIN, China, Jan. 8 /PRNewswire-FirstCall/ -- IBM ( IBM) today announced that its lending unit has signed a financing deal with Advanced Micro Devices, Inc. (NYSE: AMD) and its distributor network that will begin the flow of cash and credit in an important economic development zone in China.

Late last year, the Tianjin Government provided IBM Global Financing, the lending and leasing business segment of IBM an exclusive license to provide accounts-receivable lending (commonly referred to as 'factoring') in the Tianjin Binhai New Area, a key economic development zone, designed by the government to provide support for innovative business initiatives.

"One of the keys to economic recovery is the successful partnering of private and public sectors," said Mario Bernardis, general manager for worldwide commercial financing, IBM Global Financing. "This new partnership with IBM Global Financing and the Tianjin Government will bring great benefits to businesses looking to speed up the conversion of their invoices to cash. We are grateful to the Tianjin Administrative Bureau of Industry and Commerce for granting IBM this factoring license - a first of its kind in China."

Credit is a key concern for businesses all over the world trying to keep their balance sheets healthy. As goods and services pass through their vendor supply network, companies must sometimes wait from 90 to 120 days to get paid. With this new factoring license, IBM recently established a new operating entity called IBM Factoring (China) Company Limited. This new IBM entity will help businesses operating in the country smooth out the time lag between invoice and payment.

IBM Factoring (China) Company Limited has entered into an agreement with Advanced Micro Devices (NYSE: AMD) to factor AMD sales receivables in China. IBM Factoring (China) Company Limited will purchase receivables resulting from sales by AMD to its main technology distributors. IBM Factoring (China) Company Limited will pay AMD up front for inventory delivered to its distributor network and extend payment terms to these distributors on a flexible schedule.

"This customer-focused financing arrangement can facilitate the flow of AMD's market-leading solutions throughout the China marketplace," said Devinder Kumar, AMD senior vice president, corporate controller and treasurer. "Working with IBM Global Financing, our customers in the region can focus on leveraging our technology towards greater profitability and resilience, and let the payment cycle run smoothly in the background."

IBM Global Financing has been operating in China for more than 10 years. It provides IT leasing and financing to clients across many industries in China, helping them to acquire the IT solutions they need to be successful and competitive. IBM Global Financing also supports the sales and distribution of IBM hardware and software to IBM's Resellers. IBM's financing operations drive channel growth through innovative programs such as payment extension programs, and through solutions to reduce collection disputes. In addition, IBM China Leasing Co offers leasing for IBM products.

A 4-trillion-yuan (585.7 billion U.S. dollars) stimulus package, backed by proactive fiscal policy and moderately easy monetary policy, has encouraged consistent gross domestic product growth in China. Economic development zones, like the China's Tianjin Binhai New Area provide new opportunities for business -- foreign and domestic -- to help improve profitability and stimulate the economy.

About Tianjin Binhai New Area

Tianjin Binhai New Area (TBNA) is an economic development zone within the jurisdiction of Tianjin municipality in China. The TBNA is located at the intersection of the Beijing-Tianjin-Hebei economic zone and the Bohai Bay Rim Zone, which accounts for 17% of China's population and 21% of its GNP.
The region serves as a major hub linking both north and south China, and connects China with northeast Asia. The Area is also one of China's largest education and high-tech centers, with 25 universities and more than 140 research institutes.
The Tianjin Binhai New Area includes a comprehensive overland transportation network, along with highly-developed sea freight links to over 300 harbors in 170 countries and regions. Tianjin Binhai International Airport is considered one of northern China's most important aviation freight centers.

More than 70 of the world's leading 500 corporations, such as Motorola, Toyota and Samsung have opened offices in the Area.

For more information, please visit: http://english.enorth.com.cn.

About IBM Global Financing

IBM Global Financing (IGF), the financing business segment of IBM and the world's premier single-source provider for multi-vendor IT financing solutions, serves commercial clients ranging from small businesses to the majority of the Global Fortune 100. With assets of $34 billion worldwide, IGF provides project financing, commercial financing and asset-recovery services to 125,000 clients in more than 50 countries.

Additional information can be found at www.ibm.com/financing/cn/zh/.

Private equity investments in China lead to the creation of more jobs and spending on research and development than their publicly listed counterparts, a survey showed on Thursday.

Private equity has sometimes been viewed with apprehension in China, particularly when large state firms have been the targets of investments.

In a survey dating from 2002 to 2008, the European Union Chamber of Commerce in China said that the economic and social impact of private equity investments was quite positive.

Total employment at firms backed by private equity grew by 16 percent over that period, twice as much as at publicly listed companies, the EU Chamber said in a report. Salaries also grew more quickly, it said.

"Private equity's qualitative impact on hiring and compensation is helping to move China's economy toward greater domestic consumption and more secure social stability," it said in a report.

Research and development spending as a percentage of revenue in PE-financed firms was more than 2.5 times that of their publicly listed peers, it added.

PE-backed firms saw a 39 percent average increase in profits over that period when compounded annually, compared with 25 percent among publicly listed companies, the Chamber said. (Reporting by Jason Subler; editing by Simon Jessop)

TAIPEI, Taiwan -- Nearly 40 percent of people in a new poll conducted by 1111 Jobs Bank expressed an interest in working in the financial industry, due to higher pay and better prospects for the industry in the wake of the signing of a cross-strait financial memorandum of understanding (MOU).

The jobs bank released its survey in a news conference yesterday.

The poll found nearly 40 percent of respondents thinking about entering the financial industry. Their top three reasons were: having an expertise in the area, having an interest in the area and good pay.

By market segment, over 50 percent wanted to work in banks, while 17 percent wanted to work in securities or futures trading.

At the same time, 43.59 percent wanted to work with foreign firms, 37.18 percent wanted to work with local firms, and 9.83 percent wanted to work with state-run businesses.

Some 64 percent of respondents said their interest in the financial industry increased because of the MOU, which was signed in November and will take effect in January next year. The MOU will allow Taiwan and Chinese financial operators to invest in each other's market.

Eighty-five percent of respondents said they would like to work in China as a result of the MOU.

The top three reasons for their interest in doing so were: more challenging work, prospects for good earnings for mainland Chinese firms operating in Taiwan and a more international environment.

The top three reasons for a non-interest in working in China were: unwillingness to go to China, unwillingness to work with the Chinese people and the ever-changing nature of China's work environment.

The survey was conducted by 1111 Jobs Bank from Dec. 2 to 15 on salary workers. A total of 1,239 eligible surveys were returned. The margin of error was plus-or-minus 2.41 percent.

BEIJING, CHINA: China has kicked off its first global hiring campaign for money managers to help invest its US$2.3 trillion (S$3.2 trillion) of foreign exchange reserves, the world's largest stockpile, an official said.

The State Administration of Foreign Exchange (Safe) is seeking to improve returns on its bulging reserves and it recognises that the tumult in global financial markets has left many bankers looking for new jobs, a Safe official told Reuters.

'It is time for us to hunt talent from overseas financial markets, as the post-crisis economic outlook becomes clear to financial professionals and their institutions,' said the official, who declined to be named.

The administration posted job advertisements on its website in October for positions ranging from portfolio managers to research staff, though the hiring campaign has remained low-key so far. The official declined to say how many foreigners Safe hopes to bring on board.

Analysts said the global hiring campaign was part of the agency's drive to diversify China's currency reserves, a long-standing official goal. 'With our foreign exchange reserves growing, the team of staff that manages the reserve assets should also be strengthened,' said Professor Ding Zhijie at the University of International Business and Economics.

China Investment Corp, the country's US$300 billion sovereign wealth fund, has staged two rounds of global hiring since its inception in 2007.

Safe employs about 200 reserve managers, 80 per cent of whom hold master's degrees or higher and 40 per cent of whom hold internationally recognised professional certificates.

SINGAPORE: About 1,000 Singaporeans vied for 100 top financial jobs at the "Career in China Job Fair" held at Suntec Singapore on Sunday.

Jobs search website JobsDB said it is the first time high-level financial institutions from China have come together to attract talent from Singapore.

18 Chinese banks and institutions were at the fair, including Bank of Shanghai and the Shanghai Stock Exchange.

The salary ranges for the top jobs on offer were between S$100,000 and S$400,000 per year.

A delegation of financial organizations in Shanghai started a global recruiting tour Friday afternoon, hoping to fill 115 vacancies by the end of the trip.

The 17 organizations will hold three job fairs overseas, or in New York on Dec. 5, Toronto on Dec. 9 and Singapore on Dec. 13, to recruit high level financial talents.

A similar move last year brought 66 financial talents to the city, of whom five are enlisted in a national program on hiring overseas specialists and each enjoys 1 million yuan (146,400 U.S. dollars) in subsidies from the central government.

Ji Wenguan, head of Shanghai Financial Work Commission, told Xinhua that the Shanghai municipal government was planning to provide support of housing, insurance and education for the talents.

Tax cuts would also be provided for them, said Fang Xing, director of Shanghai Finance Office.

Fang said "Talents and innovation are prerequisite to building Shanghai into an international financial center."

"It is a golden opportunity to do creative work here, work that can really make a difference, as the financial sector is developing rapidly in China," said Hua Lei, who was recruited last year and is now supervisor of high-end wealth management at Orient Securities.

In addition, the education and medical care level in Shanghai was as good as anywhere else in the world, Hua said.

"Our payment package is competitive and flexible in the global market," said Yang Qingzhong, human resource manager of Haitong Securities Co., Ltd.

Yang said his company was very satisfied with the performance of the high level talents recruited last year and was offering seven more important posts this time, including manager of assets management division.

Bank of Communications, Shanghai Stock Exchange, Haitong Securities Co., Ltd and other big names in the Chinese financial sector are among the 17 recruiting organizations.

HSBC (0005) says it has no plans to lay off staff in Hong Kong. The assurance comes one day after the lender said it was axing 1,700 employees in Britain.
"It's really the British side's affair," said Vincent Cheng Hoi-chuen, chairman of local arm Hongkong and Shanghai Banking Corp. "The European economy is not faring well, so it's not surprising to have positions reduced or natural wastage to compete better."

Cheng said in Hong Kong the bank has been recruiting staff, especially for frontline jobs.

HSBC sacked some 650 workers late last year and early 2009 when the global financial crisis began to bite hard, but hired 100 people in August.

And its insurance business said earlier this week it is hiring more financial services officers. HSBC will continue its Asian expansion while maintaining its present scale of its business in Britain, Cheng said.

UK rivals Royal Bank of Scotland and Lloyds Banking Group received bailouts totaling 46.5 billion (HK$595.11 billion) from the British government, but Cheng said HSBC is not facing any financial pressure.

He added the US$18 billion (HK$140.4 billion) raised from a rights issue earlier this year has yet to be used.

Cheng refuted claims that a 508 million yuan (HK$576.63 million) premium HSBC paid for its joint venture with the Bank of Communications (3328) is unfair, saying the local lender is very positive about its partner's credit card business development in the mainland.

Cheng believes recent moderate property price adjustments have not affected HSBC's mortgage business, adding more affordable homes may even give it a boost.

Investment banks are moving to increase headcount in China and India in anticipation of rising deal flows fuelled by strong growth rates in Asia's largest developing economies.

Banks had scaled back staffing across Asia amid a dearth of merger and acquisition activity, and stagnant capital markets.

But investment banks and headhunters report renewed interest in recruiting for senior positions as confidence mounts of inc-reasing demand for services in main regional markets.

The Chinese economy is expected to grow by about 8 per cent in 2009, while India said this week its economy grew 6.1 per cent in the June quarter from a year earlier.

The strengthening econ-omic backdrop has prompted a flurry of capital raisings to help fund expansion plans. Bankers in Shanghai and Hong Kong predict a further $30bn of equity issuance this year.

According to Dealogic, corporate equity and debt issuance in India has confounded expectations, topping $26.6bn - more than in the same period last year.

Vikram Malhotra, Credit Suisse co-head of Asia investment banking, said that the bank had moved to boost headcount in such areas as financial institutions and energy. "As the momentum in the markets has continued, we have increased capacity to meet increasing demand from clients and investors, adding more execution strength as deal flow builds," he said.

Among the bank's recent hires are Simon Yuan, who quit Merrill Lynch to co-head its greater China financial institutions coverage. Goldman Sachs is expected soon to announce senior hires in Mumbai and Beijing.

Gokul Laroia, co-head of investment banking for Morgan Stanley in Asia, said the bank had made selective senior hires on the back of rising deal activity.

Other banks have moved to reallocate senior staff from other regions to Asia, given the relative opportunities, while some are reassigning executives to new positions in China as they seek to expand their mainland platform. JPMorgan recently moved Frank Gong, chief China economist, to an investment banking role.

Another feature is the move to create senior positions in Hong Kong, to oversee China and India from banks' regional headquarters.

Morgan Stanley last month hired Ronan McCullough from Goldman Sachs to head its bond and loan syndicate for Asia Pacific.

There has been buzz lately in Asia that Hong Kong may become a has-been. As the global financial crisis gathered speed last year, Hong Kong looked relatively well insulated from the crashing markets because its banks were not heavily exposed to credit default swaps and all those other funky instruments. But the buzz is about changing politics, not markets. In April, Chinese officials announced firmly that they would like to see Shanghai become a global financial center by 2020; in the same month, Premier Wen Jiabao warned that Hong Kong must raise its game or face decline. The news was chilling for many in Hong Kong, which serves as a gateway to China for investors and is almost entirely dependent on financial services. Some 60 percent of the market capitalization of the Hong Kong Stock Exchange and more than 70 percent of its daily trading is in shares of Chinese mainland firms. Many of these are large state-run enterprises—the sort that leaders in Beijing could very easily order to trade in Shanghai instead.

Beijing pushed for Shanghai to play a bigger role as a financial center back in the early 1990s. But it didn't take off then because Chinese financial capitalism was still relatively immature. Now the mainland markets in Shanghai as well as Shenzhen are more developed, major Shanghai banks having learned a lot from the experience of Hong Kong.

Shares in state-owned firms can be more freely traded, and the government is looking to create new kinds of securities. In the coming years, Beijing is expected to allow the yuan to trade more freely, which could give it a major role in international currency trading. But to allow markets to mature without completely losing control over them, Beijing needs traders that are competent, but also compliant—the sort it can reach and influence more easily in Shanghai than in Hong Kong, where market rules are still based on foreign law.

Chinese officials are also beefing up banking in Beijing, but given Shanghai's historic position as a trading center and its broader reach in finance, it will likely remain the country's key city of commerce. What's more, the fact that the Shanghai faction in government lost power a few years back when a number of politicians were taken down for corruption means that Beijing can now better police and direct the city's future development.

Finally, like most financial centers at the moment, Hong Kong is in a drastically weakened state. Amid the global crash, Hong Kong's economy contracted by 7.8 percent in the first quarter of 2009, even as China's GDP as a whole continued to grow. Now that the entire world is tipping toward Beijing's model of state regulation, China may feel emboldened to sideline this eastern redoubt of British free-market capitalism.

So Hong Kong is searching for a new role once again. The city has adapted before—it went from selling plastic flowers 50 years ago to higher levels of manufacturing to being a global financial capital. It still has the advantage of a fully convertible currency, as well as rule of law, which remains unreliable on the mainland. And last week's announcement that Charles Li, a JPMorgan banker with strong ties to the mainland, would take charge of the exchange in January was a sign that Hong Kong is trying hard to bolster its position. But with at least some of its old business likely to move to Shanghai and Beijing, the city needs to move beyond trading, and leaders know it. Speaking to the American Chamber of Commerce in Hong Kong recently, the city's current stock-exchange chief, Paul Chow, acknowledged the challenge. ÒLook back over the past five years, and compare the state of [the] mainland China market in 2003 to the current state. Substantial improvements. And what will happen in the next five years? Ten years?Ó

If Beijing has its way, the answer is clear. Yet there are still opportunities for Hong Kong to rebrand itself, perhaps as a provider of consulting services to Chinese businesses—helping less-sophisticated enterprises from the mainland figure out how to sell themselves to an international audience as they expand abroad, or as an education hub, churning out M.B.A.s to work in top Chinese and Asian businesses. Either way, it will need to deal with some of the governance problems and issues of vested interests that have plagued it in recent years. Critics say Asian tycoons are able to bend market regulations to suit their whims here, and the city has yet to deal properly with its recent minibond scandal, in which many individual investors lost their life savings after unwittingly buying Lehman Brothers' bonds through intermediaries. One of the last remaining advantages Hong Kong holds is the perception that it's still a fairer, better-governed financial capital than Shanghai. If it can't hold on to that, it will surely become, as former Chinese premier Zhu Rongji predicted a few years back, Toronto to Shanghai's New York.

Bank of China, China's second largest lender, has made seven senior hires for its new Swiss private banking office, with an emphasis of coverage on the Middle East and Latin America.

BoC became the first Chinese bank to open a private banking office in Switzerland last November, offering private banking and a fund management service.

The new hires were detailed in a press release from the bank. Fatima Al Arabi joins as head of institutional clients, the Middle East. Mohamad Bleik joins as co-head of private banking, in the Gulf Cooperation Council. Teresa Cheung-Constantin, joins as a senior private banker.

Jean-Pierre De Barro joins as head of sales. Julien Froidevaux is head of the independent managers department. Jose Luis Piccinini joins as head of institutional clients, Latin America. Daniel Alexander Rieber, joins as senior private banker, Latin America.

The new hires report to Jacques Mechelany, the former chief executive of Heritage Fund Management, who last November was hired to head the new private bank.

The private bank is a wholly-owned subsidiary of Bank of China (UK), which is itself a subsidiary of the Bank of China group.

A spokesperson for the bank did not immediately return calls.

Bank of China, the country's third-largest lender, plans to recruit 10,000 college graduates to staff its expanding networks, its president said.

The hiring "will be the biggest among the country's commercial banks," the Beijing Times reported, citing Li Lihui, president of Bank of China.

The nation's biggest foreign exchange bank will also expand its networks this year and some of the new recruits will be assigned to those outlets, Li said on the sidelines of the annual sessions of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC).

The Beijing-based lender also said on Saturday that Temasek Holdings Pte, which owns 4.1 percent of the bank, would not sell its stake until at least June 30, Xinhua News Agency reported, citing Chairman Xiao Gang.

Temasek, Singapore's government-owned investment company, has 10.48 billion Hong Kong-listed shares of Bank of China.

Xiao also denied rumors that Bank of China will take its Hong Kong subsidiary BOC Hong Kong private.

Win-win Cooperation Between China Leading CROs, Boosting Full Service Capability

HANGZHOU, China, March 3 /PRNewswire-Asia/ --

Tigermed Consulting Co., Ltd, a leading Contract Research Organization (CRO) in China, and Qiming Venture, a premier venture capital firm based in Shanghai join hands to grant asset injection to MacroStat, the unique CRO in China specialized in clinical data management and statistical analysis. The union between the two top CROs will significantly improve Tigermed's clinical data management serviceability and broaden MacroStat's business line.

''MacroStat has the leading talents and system in biostatistics, with absolute competitive advantage in China. Tigermed and MacroStat shall establish extensive strategic partnership in the management of clinical trials, data management and statistical analysis. Tigermed accumulated outstanding expertise in clinical trials, while MacroStat is an expert in biostatistics. Our cooperation shall expand Tigermed's business line and add professionalism to Tigermed's biostatistics services. The win-win cooperation between leading CROs with complementary advantages is conducive to constructing a higher level of CRO service chain and further updating full service capability, which also opens a fast track to the globalization of China CROs,'' comments Dr. Ye Xiaoping, CEO and founder of Tigermed.

Ms. Cao Xiaochun, Vice President of Tigermed, added, ''Tigermed pays close attention to MacroStat advantage in data management and statistical analysis. Besides Ms. Cao Xiaochun, Dr. Ye Xiaoping (CEO and founder of Tigermed) and Hu Xubo (Director of Healthcare Investment Sector of Qiming Venture) will also join in MacroStat's board of directors. The cooperation between Tigermed and MacroStat will not only satisfy global clients with international standards but also power the innovative drug development in China, making it possible to streamline clinical research cycle and considerably reduce drug R & D costs.''

''MacroStat has set up strategic partnerships with many multinational pharmaceutical and biotech companies and international CROs, and has become their preferential biostatistics vendor. MacroStat's customers are mainly from USA and Europe. With the new capital, MacroStat will further accelerate its development effectively, on one hand, keeping the unique advantage in biostatistics, one the other hand, extending business line into clinical trials, so as to provide more extensive and comprehensive services for the pharmaceutical industries.'' Comments Helen Yin, managing director of MacroStat China.

About MacroStat

MacroStat, an international CRO, founded in 2002 in USA, is one of the few professional CROs dedicated to providing clinical data management and statistical analysis services. MacroStat is specialized in providing data and safety monitoring board (DSMB) support for USA FDA, and statistical support to FDA, CVM, EPA, MAA, MCA and other agencies and Asian countries. MacroStat (China) was established in 2005 in Shanghai, and now becomes the unique CRO focused on biostatistics in China

About Tigermed

Tigermed Consulting Co., Ltd, a leading Contract Research Organization (CRO) in China, is expected to become the largest CRO in China within 3 years. With capital injection from Qiming Venture in 2008, Tigermed has entered into a period of rapid expansion. The combined asset injection to MacroStat marks a stride forward in Tigermed's internationalization strategic development. The extensive cooperation between Tigermed and MacroStat allows both to make a big step forward.

HONG KONG (Dow Jones)--Accounting firm Deloitte Touche Tohmatsu plans to hire as many as 2,400 new staff for its mainland China and Hong Kong operations, the South China Morning Post reported Monday citing a senior executive.

The hiring campaign "reflected the firm's belief that (China's) economy would rebound to strong growth despite the recent poor market environment around the world," Kester Yuen, regional managing partner for southern China at Deloitte, was cited as saying.

Around 400 of the jobs will be in Hong Kong, while the rest will be based in mainland China, the report said.

It said the new recruitment will represent an increase of 18% in the headcount of the Hong Kong division and a 25% increase in the mainland China division.

Newspaper Web site: http://www.scmp.com

by CSC staff, Shanghai

Lin Kaiqing, a Ph.D. from the UCLA Department of Mathematics, was once a mathematical researcher working on such problems as Goldbach’s Conjecture. In 1997 he moved over to the financial industry and worked for Washington Mutual, JP Morgan Chase, and Credit Suisse before joining Duff & Phelps, an independent financial consulting and investment banking firm.

Born in Taiwan, Lin Kaiqing has always considered Mainland China his home. Now his biggest wish is to return to Shanghai and set up a team to operate the company’s Asian business.

The financial crisis has pushed the unemployment rate in the US to 6.7%. Wall Street may cut as many as 200,000 employees in the financial and related IT areas. Chen Xunyong, founder and chairman of Wall Street Ren, an organization of Chinese Wall Street professionals, says nearly 10% of Chinese working on Wall Street have lost their jobs.

“I have several friends that have been recently laid off. They can find a new job within months, but during this time they have begun to notice work opportunities in China that they didn’t pay much attention to in the past,” Chen said. “Our group began to pay attention to the Chinese market and job opportunities in China. I went to China last month during my vacation and met senior managers of many securities and fund companies.”

Seizing opportunities in China

Chen was surprised at Chinese investment companies’ overseas strategies and eagerness to invest overseas, and sees great opportunities in China

“Originally we founded this group to offer Chinese working on Wall Street a communication platform and to assist domestic governments and organizations recruiting in the US. But it’s the first time for us to go back to learn about China and form a dialogue mechanism.

After taking the first steps, Wall Street Ren began to contact Chinese organizations and recruiters more frequently and introduce China to its members. For many Wall Street professionals who having been working in the US for many years, going back to China would be a “great leap”.

“In the past, many Chinese went back home soon after finishing financial courses in the US and didn’t have rich working experience. Now it’s different. Those returning or who have already returned are often senior professionals above manager level.

Chinese companies, including the China Investment Company, have been issuing recruiting advertisements in overseas media such as The Wall Street Journal. Overseas Chinese professionals are beginning to realize Chinese financial firms’ determination to expand overseas business and recruit overseas talents.

Among talent going back, 50% choose to work in Hong Kong, and the rest come back to Mainland China. “According to our figures, of the senior positions in Wall Street financial institutions occupied by Chinese, 90% are by Mainlanders.

Worries still exist

“Of course we still have concerns. I never drink wine, and I’m afraid I can’t get used to the working environment in Mainland China,” Lin Kaiqing told China Business News, adding that some possible returnees worried if they’ll be able to accommodate themselves to the Chinese working environment, which requires high sociability.

Lin Kaiqing’s biggest concern is whether his 11-year-old son and 5-year-old daughter can accommodate themselves to a pure Chinese teaching environment.

Lin Kaiqing has always planned to return to China when his children are grown. “I first planned to go back to LA after retirement, but now, although I think LA is good, it’s not my home. I must go back to China, my real home.”

Some of Lin’s friends have already returned to China, and one of them is now working for Everbright Bank. They all say their life in China is very pleasant. Lin is considering a return to China after his company is licensed to establishment a Shanghai branch.

High salary

In December, recruiters from Shanghai, Beijing, and Nanjing will fly to New York, Chicago, San Francisco, and Boston to recruit Wall Street talent. The Mayor of Nanjing even flew to New York himself. Positions open to Chinese Wall Street talent include international financial market investment, financial and economic research, asset management, risk control, financial derivatives development, industry risk analysis, and creative supervision.

Nanjing also wants to bring in expertise in electronic and biological technology from the San Francisco Bay Area. Recruiters from Shanghai include the Shanghai Stock Exchange, the government of Pudong District, Shenyin Wanguo Securities Company, Guotai Junan Securities Company, Shanghai Pudong Development Bank, and Citic Bank.

“Salaries will be lower back in China. In the US an annual salary for a senior manager in an investment firm can amount to millions of dollars, and domestic institutions can’t pay so much. But money is not the reason they go back,” said Chen Xunyong. “And of course the salary gap is narrowing some.”

Lin Kaiqing also said he was surprised when he heard domestic companies are willing to pay four or five million yuan per year to Wall Street talent. For him, this is really a big move, as big as the 4 trillion yuan economic relief package.

Out-of-work finance professionals in the UK and US have a new reason for optimism about their employment prospects - especially if they speak Mandarin.

Chinese financial institutions are set to exploit the widespread job losses in western financial centres as a result of the credit crunch by next month embarking on a hunt for financial experts willing to relocate.

The Shanghai Financial Service Office has told state media the city is sending a delegation to New York, Chicago and London to recruit specialists in risk management, asset management, product research and development, macro-economics and policy analysis.

The head of human resources at the office said at least 27 financial institutions in Shanghai, China's commercial and financial hub, had listed more than 170 vacancies specifically targeting foreigners.

The global financial turmoil has led to tens of thousands of job losses in financial services.

London and New York have been hit especially hard, while many of those still in employment fear for their future.

However, the salaries on offer in China are unlikely to meet international standards and a preference for those who understand and speak Mandarin Chinese will probably rule out many potential candidates.

In addition, China's unique political environment, in which the Communist party exercises ultimate control over all aspects of the financial, legal and commercial systems, means foreign passport-holders are unlikely to be given senior positions in state-run institutions.

China Investment Corp, the country's sovereign wealth fund, launched a global recruitment drive earlier this year but it was unable to match the salaries on offer in the City or on Wall Street.

Shanghai officials said organisations interested in recruiting in the UK and US included the nascent China Financial Futures Exchange, the Pudong financial district government, and state-run securities agencies, insurance companies and also banks.

The delegation will also try to recruit an assistant to the president of Shanghai Financial University, a chief economist for the SFU's International Finance Research Institute and a dean for its International Finance and Insurance School.

Academic posts are more likely to be offered to

foreigners as such positions are considered less politically sensitive.

China's state-owned Assets Supervision and Administration Commission has said it encourages the country's largest state companies to recruit internationally, but the number of foreign employees at those companies is still negligible.

All senior managers above a certain level at state companies are appointed by the secretive Communist party personnel department, regardless of the wishes of board directors or share-holders.

SHANGHAI (Reuters) - Global accounting firm PricewaterhouseCoopers PWC.UL plans to hire about 2,000 graduates in China in 2009, part of its long-term plan to expand in the country despite the global credit crunch, its top China head said on Monday.

PricewaterhouseCoopers, one of the world's "Big Four" auditing firms, also plans to retain this pace of hiring for the next three to five years and will open new offices in the vast country "very soon" to support its rapid business growth, said Frank Lyn, Beijing-based China Markets Leader of PwC.

Lyn also noted that Chinese companies with ambitions to expand in the West through mergers and acquisitions could wait another six to nine months when deals are expected to be cheaper.

"The current economic crisis is something that everyone is very, very concerned about," Lyn told Reuters in an interview in Shanghai, China's financial hub.

"But if you take a longer-term view and the fact that we're here to stay, we are not just hiring for now but ready to train our people for the next five to 10 years," he said.

On average, it takes three to five years to groom a graduate to the level of a senior associate in PwC, Lyn added.

Last year, PwC hired 1,800 graduates and 800 experienced executives in China, Lyn said, adding it would be difficult to forecast how many experienced staff would be hired next year because the market environment will be different.

PwC has around 11,000 employees in China, Hong Kong and Macau where the firm operates a total of 13 offices.

Globally, PwC runs offices in 153 countries with more than 155,000 staff.

In China, PwC's major rivals include Ernst & Young ERNY.UL, Deloitte & Touche DLTE.UL and KPMG KPMG.UL, while it is also facing growing challenges from smaller local firms as China's Ministry of Finance is keen to strengthen the country's own accounting industry.

LET VALUATIONS SETTLE

PwC became the official auditor for the listing of Bank of China (601988.SS: Quote, Profile, Research, Stock Buzz) (3988.HK: Quote, Profile, Research, Stock Buzz) in 2006, China's top foreign exchange lender, which marked one of the world's biggest initial public offering of shares that year.

Besides Bank of China, many Chinese clients of PwC are big state-owned enterprises such as PetroChina Co Ltd (601857.SS: Quote, Profile, Research, Stock Buzz) and China United Telecommunications Co Ltd (600050.SS: Quote, Profile, Research, Stock Buzz).

Big Asian firms, especially from China and Japan, are widely expected by Wall Street to make investments in the near future in the United States, where companies such as General Electric Co (GE.N: Quote, Profile, Research, Stock Buzz) or 3Com (COMS.O: Quote, Profile, Research, Stock Buzz) are keen to lure foreign capital to support growth amid the credit crunch.

Chinese companies "should not stop doing so but should really pause and let the valuations settle," said Lyn, referring to firms with ambition to expand abroad.

"We still believe we have to go out there and do the outbound investment for a variety of reasons -- buying technology, expertise, market share and so on," he said.

"You'll see in six to nine months, the activities will pick up and that's my personal view purely from the value perspective," he added.

Thousands of financial workers on Wall Street are losing their jobs during this financial crisis, leading to a great dislocation of financial talent.

The so-called hot job and hot department in the financial industry will be redefined. Enthusiasm over investment banks such as Goldman Sachs and Lehman Brothers will wane, and attention will move back to the steadier, more conservative, and less risky financial institutions such as commercial banks. The internal structure of financial institutions such as banks and insurance companies will also change. Some functions such as risk management, which used to be neglected, will be repositioned and revalued. Some financial workers will have to change their professional orientation, since positions related to investment will weakened or even disappear.

Compensation and professional quality in the financial industry will also be redefined. Greed and lack of self-discipline are at the root of the financial crisis. Wall Street, with its high compensation and luxurious life styles, brought too many dreams and too much pride to too many young people, where a graduate could get a high salary fresh out of school. But now things will calm down. Too much risk lies behind irrational success and irrational wealth growth.

In the following years, the former attractiveness of investment banks, mutual funds, hedge funds, private equity funds, and leverage buyout funds is going to fade. With the crazy age coming to an end, compensation levels on Wall Street will no longer be No. 1 in the US. Wall Street will no longer be the only choice of top MBA graduates, as they will once again consider traditional and high-tech industries. High quality professional managers with will also flow to other industries.

Since the crisis, people begin to consider the ethical standards of the financial system. Wall Street and European financial markets are all considering what kind of senior managers, CEOs, and CFOs financial firms need. Further lessons on how to avoid and control risk are being learned by financial institutions. What kind of culture should be admired in financial firms? In the past, the trader, passionate, adventurous and ready to go to extremes, was the admired model. But now, at least for a while, banks are laying off the traders, and risk managers are not only keeping their jobs but being poached and headhunted as banks seek to shore up their internal control departments.

China’s industry will be more attractive to Chinese financiers. Due to downsizing in the US, Chinese employees there will also be looking for jobs. Under the circumstances, coming back to China may become their best choice. At least China’s overall economic and financial situation is still better than the US and Europe. Now many Asians are considering returning to their emerging markets, as they are more likely to find jobs there, even though the financial markets in these countries are far from their expectations. This may trigger a series of talent competitions among domestic financial institutions.

In fact, more and more western professional managers, having faith in opportunities and challenges in China and its neighboring markets, were participating in the domestic financial talent competition before the outbreak of the subprime crisis. But now the requirement for talent in the domestic financial market will include not only professional knowledge and financial management skill, but also the knowledge about China’s local culture and commercial environment, which will be as important as financial tools for some positions.

Financial institutions in Shanghai are likely to start snapping up jobless Wall Street professionals by the end of this year.

Some local fund and securities companies, led by Shanghai financial working commission, may go to Wall Street later this year to hunt for possible recruits, according to a top executive from Shanghai-based fund company Huaan Fund.

"Although the city is becoming more of a player in the global financial market, we have a dearth of employees with global financial expertise," said a senior official at the firm surnamed Xie.

He added that the company recently received a notice from the local financial working commission, but a detailed schedule has yet to be arranged.

Huaan started recruiting foreign talents for top positions in 1999. "Investment managers and legal talents from Wall Street investment banks would be our major targets. Talents with overseas backgrounds would help boost our competition in the market," Xie said.

Some fund managers also said that the salary expectations of top Wall Street professionals may fall given the current global financial turmoil.

The local financial working commission could not be immediately reached for comment.

"Operational efficiency is critical to support portfolio realization in the financial sector, and Wall Street talent has experience of the ups and downs in financial sector business," said Jenny Li, managing director of Hewitt Greater China, a human resources consulting firm.

Domestic companies are short of talents with leadership who can compete in a globalized economy.

"The introduction of Qualified Domestic Institutional Investors along with the opening up of renminbi business to foreign banks has provoked a huge demand for financial talents in product development and risk control," said Christine Cheng, practice head of accounting and finance at a staffing sources firm Manpower China.

But Li warned Chinese financial players that they have to align their business strategies when hunting for various talents on Wall Street.

Thanks to last year's bullish market, the financial sector provided the most lucrative jobs in China and fund management talents topped the 2007 salary rankings, The Economic Observer reported on Monday.

Executives, fund managers and high-caliber investment researchers were the top earners, according to Taihe Consulting, a human resources company, after conducting a survey on 15 large fund management companies in Shanghai, Beijing and Shenzhen.

Industry insiders have attributed the high earnings to a shortage of fund management talents and the thriving fund businesses in 2007.

Even the current bearish market has not shown an adverse effect on fund employees' incomes yet.

Statistics collected by Taihe in June indicated no signs of fixed income reductions among fund management employees. And flexible income was closely related to companies' performances, it found. Some companies can still collect remarkable management fees in 2008 that are no less than last year's, Taihe said.

The cash income of an employee comprises a fixed part and a flexible part in addition to their benefit package. The fixed part is made up of basic salary and allowances, and the flexible, accounting for 30 to 40 percent of the total income, is given as a merit-based bonus, such as year-end bonuses, or as sales commissions. Some positions even offer a flexible income that takes up as much as 50 percent of the total.

An employee with a Shenzhen-based fund management said: "The fixed salary was set at the beginning of the year, so there would be no big change. The flexible part may vary from person to person…some fund managers won't necessarily get a smaller year-end bonus, because the payment is based on the rankings of fund performances."

By contrast, listed securities companies already registered a year-on-year drop of 8.6 percent in salary payments in the first half of 2008, with some employees' incomes reduced by more than 60 percent, according to a report by Shanghai Securities News in August.

From a regional perspective, fund management companies in Shanghai, a national financial hub, offered the most lucrative jobs in 2007, Taihe's survey showed. Beijing came second and Shenzhen third.

The consulting company found that the lower-end salaries of fund management, real estate and high-tech sectors were quite similar. But at the very top level, the financial sector offered salaries that doubled what the high-tech gave, with real estate coming somewhere in between.

"Financial employees earned much higher salaries than people in the other industries in 2007," a Taihe analyst said. "And undoubtedly the most lucrative jobs came from the fund sector."

HONG KONG, Aug 26 (Reuters) - Goldman Sachs' senior China economist, Hong Liang, has resigned amid reports saying she plans to join a mainland Chinese competitor.

A source at the investment bank (GS.N: Quote, Profile, Research, Stock Buzz) said on Tuesday that Liang had a disagreement with the bank's management and wants to move into capital markets. Liang could not be reached for comment. A Goldman Sachs spokesman said Liang, a Hong Kong-based executive director of Asia economic research at the bank, resigned last week.

According to the South China Morning Post newspaper, she is likely to join Beijing-based investment bank China International Capital Corp (CICC), which is partly owned by Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz). CICC could not be reached for comment.

The Goldman Sachs spokesman denied a report in the South China Morning Post that professor Song Guoqing, a senior economist at Peking University, had also resigned as an adviser at Goldman's China joint venture, Gaohua Securities. (Reporting by Alan Wheatley and Susan Fenton, Editing by Ken Wills)

Robin Marriott

Blackstone is ramping up its regional presence in Asia with its first office in mainland China.

The group has so far opened offices in Tokyo, Mumbai and Hong Kong, but it is poised to add to the network with an office in China’s second biggest city and political hub.

Stephen Schwarzman, chairman and chief executive of the group, revealed the move as he outlined the firm’s growth around the world during a presentation at the Bernstein Strategic Decisions Conference in New York yesterday, telling delegates: “We just signed a lease in Beijing.”

In the last ten years, he said, Blackstone had opened in London, as well as a smaller office in France, Hong Kong, Tokyo and India.

“We are very rapidly growing. From 2005 to the current day staffing has grown by 100 percent as we move around the world. It is a business with enormous dynamism and 1,200 people,” he added.

Blackstone opened an office in Mumbai in 2005 to handle private equity and real estate investments and followed that up last year when it opened a satellite office in Hong Kong from where former Hong Kong financial secretary Antony Leung is directing operations as chairman of Blackstone Greater China. Earlier this month, the firm added new impetus to the region when it announced the launch of a hedge fund business Blackstone Altius Advisors, which it called a new “event-driven” strategy focusing on opportunities in the Asia Pacific region. That business is being headquartered in Hong Kong.

In an interview with PERE in March, president and chief operating officer Hamilton James said the firm was busy staffing up the Hong Kong office with real estate professionals. At the same time, he said the firm was adding professionals in Tokyo and Mumbai. Speaking of Asia, he told PERE: “Those markets will be a much larger portion of our real estate investing activity than they have been historically.”

Blackstone’s other activities in Asia include a fund of hedge funds and two closed-ended mutual funds, The India Fund and The Asia Tigers Fund. Its 10th real estate fund, which closed in April on $10.9 billion, and its fifth global buyout fund, closed on $21.7 billion in August 2007, are active in the region.

Annual reports from several Chinese banks over the weekend reveal sky-high salaries for the senior management boards in China's banking sector. China Minsheng Banking Corporation stands out with the highest paycheck.

Dong WenBiao, the president of China Minsheng Bank, tops the income chart. His annual pre-tax salary reached over 17.5 million yuan last year.

China Merchants Bank is also being generous to senior executives. In 2007, it doled out 53 million yuan to 26 board members and executives, and its CEO, Guan MaWei, earned nearly 10-million yuan pre-tax.

The Industrial bank paid out nearly 16-million yuan to 15 board members and executives. And its president, Gao JianPing, earned nearly 3 million yuan.

It won't be long before Chinese bank workers make more than their South Korean counterparts in terms of average annual salary.
The Beijing Times on Thursday released a report on the average annual salaries of employees in 14 Chinese banks in 2007. According to the report, China's best-paid bank employees work at Shanghai Pudong Development Bank, where the average annual salary is 366,700 yuan, or roughly W55 million (US$1=W997).

That's very close to the average annual salary of South Korean bank workers, which is W64 million. Even South Korea's best-paid bank workers -- at the Korea Development Bank -- make only W76 million per year on average.

And in terms of real purchasing power, Chinese bank workers make far more than their South Korean counterparts. According to the U.S. CIA Factbook, measured on a purchasing power parity (PPP) basis, Chinese workers actually earn about double the amount of their income as figured in U.S. dollars by the nominal yuan-dollar exchange rate.

According to this standard, the average annual salary of Shanghai Pudong Development Bank employees in 2007 was more than W110 million, much more than that of South Korea's KDB employees.

According to the Beijing Times report, China's next best-paying bank was CITIC Bank (average annual salary of 242,200 yuan, W36.33 million), followed by China Minsheng Bank (231,800 yuan, W34.77 million).

During my two-hour-long interview with a senior Chinese banker recently, we covered a lot of topics, from the credit crisis in the U.S. to the emergence of consumerism in China. He was unusually open for a Chinese executive. But when I asked about his multi-million yuan ($1 is about seven yuan) compensation last year, he fell silent.

If you think executive pay is a controversial topic in the U.S., or that the tension between highly-paid CEOs and shareholders is high here, you should see China. Publicly-traded Chinese companies didn't start disclosing executive-pay information until a couple of years ago, and it instantly became an explosive topic in proxy seasons. Many Chinese raised questions such as, "What do they base their pay on?" and "How could they make more than the state chairman?"

The senior banker said he would be more than happy if his name weren't associated with the topic. On the one hand, he explained, top executives at public companies do make a lot more than executives at state-owned enterprises and government officials, not to mention the majority of ordinary Chinese. On the other hand, he said, people like him are make far less than their counterparts on Wall Street and in Hong Kong. To attract and retain talented people who are increasingly moving around globally, public Chinese companies need to offer comparable salaries and bonuses. So the pay of executives like him are more or less a compromise between China's reality and market competition.

"But how can I say this to those who make very little?" he asked. "They won't understand, and I don't expect them to understand."

I see his point. I can't imagine China going back to the egalitarian society that we escaped 30 years ago, in which everybody received a salary based on their educational background and seniority, instead of their capabilities and achievements. Few people will work hard unless they know they will be rewarded, whether that reward is a bonus for a banker, power for a politician or a harvest for a farmer. That's simply human nature, and China's economic growth in the past three decades is the best evidence of it.

But I also understand why the unemployed, the middle class and lowly-paid government officials get angry at what they see as astronomical pay. The average annual income of urban workers in China last year was 24,932 yuan ($3,561), according to the National Bureau of State Statistics. Farmers and migrant workers make far less than that. Meanwhile, Shenzhen Development Bank Chairman and Chief Executive Frank Newman made roughly 23 million yuan ($3.3 million) in 2007, about 922 times the average urban pay [in an earlier version of this column, I mistakenly said 92 times], and Ping An Insurance Co. Chairman Ma Mingzhe made more than 66 million yuan ($9.3 million), or 2,647 times a regular worker's pay. (He donated 20 million yuan to a charity.)

The executive-compensation figures have triggered a public backlash. In an online vote on Sina.com, one of China's top portals, 93% of voters disapproved of the executive-pay practices at Ping An and Shenzhen Development Bank.

Mr. Ma of Ping An has also been made a villain in Internet chat rooms and on online forums since his pay information became public late last month. "Is the 66 Million Yuan Pay an April Fool's Joke?" demands a post on the popular online forum Tianya.cn. Last week, 1,055 car owners petitioned the China Insurance Regulatory Commission to investigate Ping An's executive-pay practices. They also asked the regulator to find out how much of the obligatory car-accident insurance fees they paid went to Ping An's executive compensation. The petition has been cheered on by Internet posters, with a 7,000-word-long post depicting Mr. Ma and Ping An's rise to fortune widely circulated between forums. The article includes many unverified details, and allegations that Mr. Ma used connections with powerful people to become one of the wealthiest people in China.

More importantly, some state-controlled public companies rely on monopolies and preferential government policies for their profits, so there's an understandable debate about whether these firms' government-appointed executives should get paid handsomely -- and if their compensation should be linked to those "guaranteed" profits.

Ping An and Shenzhen Development Bank are no longer state-controlled, although they were started with funding from local governments. But CEOs at state-controlled mega-banks, such as Bank of China, Industrial and Commercial Bank of China and Construction Bank of China, are appointed by the government, and their positions are equivalent to vice ministers. Some company leaders have been called back to work as government officials. The Chinese government doesn't disclose income for its officials, but vice ministers are believed to make less than 10,000 yuan a month (although they do get other benefits, such as housing and drivers). All CEOs at the nine publicly-traded banks received more than one million yuan in compensation in 2006.

As these banks are getting better at disclosing information about their executive pay, they also need to answer the questions raised on online forums again and again: Do these officials deserve more than 10 times their government pay once they are appointed as CEOs of public companies? Do they have the managerial talent to be retained with shareholders' money? Is their loyalty to the government, or to their shareholders? If some of the bank's income comes from its monopoly position and preferential government policies, should the CEO be rewarded for that?

There are no easy answers to these questions: While the U.S. and other industrial countries have been debating executive pay for many years, China has just started the discussion -- and has to conduct it against the backdrop of a complex asset structure and political system. But it seems that the Chinese public is determined to ask these tough questions every proxy season. And that in itself is encouraging.

Write to Li Yuan at li.yuan@wsj.com.

A financial services recruitment firm has reported a further weakening in the UK banking sector.
Michael Page International plc published its interim management statement relating to the period from 1 January to 31 March 2008, the first quarter of the financial year ended 31 December 2008.

For the first quarter of 2008, Michael Page reports a record quarterly group gross profit of £140.3m, an increase of 33.0 per cent (23.8 per cent) over the £105.5m recorded in the first quarter of 2007.

In the group’s largest region, Europe, Middle East and Africa (EMEA) representing 46 per cent of its gross profit, first quarter gross profit was £65.2m, an increase of 55.3 per cent (37.7 per cent) over the £42m recorded in the first quarter of 2007.

“With good activity levels, we continue to experience strong demand for talent across all countries and disciplines, with the exception of banking,” the firm said.

In the UK, representing 34 per cent of group gross profit, first quarter gross profit was £47.1m, an increase of 6.7 per cent over the £44.1m recorded in the first quarter of 2007.

“While it is not possible to quantify, our first quarter growth rate was affected by the early Easter break and a further weakening of the banking sector, which is also impacting some of our other disciplines that service banking clients,” according to the group.

Outside of these banking related areas Michael Page International reported good activity in job and candidate flow.

In Asia, the group’s businesses grew gross profit at 11 per cent, with China, including Hong Kong, continuing to grow strongly, offset by a slowing in its Tokyo business, where banking represents a higher proportion of the business.

Steve Ingham, chief executive of Michael Page International (LSE:MPI), said, "Whilst we continue to experience strong activity levels and demand for talent, in certain areas there are signs of more cautionary behaviour.”

Sun Minjie, executive vice-president of Bank of East Asia in Shanghai, was happy that he didn't have to offer too much money to find suitable staff for the newly opened Qingdao branch a year and half ago. An auditor he poached from an accounting firm in the city demanded only 5,000 yuan ($714.29) a month, compared with about 30,000 yuan for someone with equivalent experience and qualifications in Hong Kong.

Last month, that person quit to join another bank in Shanghai although Sun tried to keep him by hiking his monthly pay to 25,000 a month.

"What a difference 18 months made," sighs Sun. But this is far from being a unique case. Job-hopping has become common among the local staff of foreign banks and other financial institutions.

"There are many cases like this one (among foreign banks in China)," says Sun.

The fight for qualified talent in the financial sector, especially in Shanghai, has initialized a massive restructuring of executive pay scales that are extending to many other sectors.

Following the full opening of the nation's banking sector in late 2006, overseas lenders are embarking on a rapid expansion in China, but the race for qualified and experienced workers might slow their pace.

In a survey by PricewaterhouseCoopers last year, 40 overseas banks polled said that finding and retaining good personnel was the second-most difficult job in the Chinese banking industry.

Twenty-five banks will more than double their China staffs by 2010, according to the survey, while six plan to add more than 1,000 employees over the next three years, and three will hire 3,000 people.

Of the 40 banks that polled, 35 percent recorded annual staff turnover rates between 15 and 20 percent. Only a small group of large international banks have been able to keep that rate below 5 percent.

It's not hard to find someone with lower qualifications in the market, Sun says, though what the overseas institutions really need are experienced and trained workers to support their rapid growth.

Yet for large international banks, frontline workers are among the most needed. But rather than an ample supply of young graduates, experienced people are what banks really need because they are supposed to work in a sector that not only stresses innovation but also risk management and control.

"There is an escalating need for staff, especially frontline workers, to support our fast-expanding retail banking business," says Paula Ko, head of human resources at Standard Chartered Bank (China) Ltd.

"The demand is so fast and huge, and happens across the country," says Ko, whose bank doubled its China staff from about 2,000 in 2006 to its current 4,000.

To handle the need for proper personnel, the London-headquartered bank has transferred some workers from its corporate department to retail banking.

But for the long run, Standard Chartered's China consumer banking head Christine Ip says the bank will rely on both campus recruitment and poaching from the market.

In addition to those who have direct contacts with the customers, skilled personnel are acutely needed for new businesses that foreign banks are carrying out, bankers say.

Personnel familiar with wealth management, private banking, credit cards and treasury departments are all needed.

HSBC, one of the largest financial groups in the world, made the race for private banking professionals more intense by launching offices on March 31 in Beijing, Guangzhou and Shanghai.

The bank expects to grow the number of its private banking managers from 9 - all local Chinese - to 18 by the end of the year, and to about 40 shortly after that.

What HSBC needs are mature, intelligent professionals who have a lot of networks in China, says Yvonne Hsin, deputy chief executive of HSBC's private banking for Asia.

Declining to comment on how much the bank is willing to pay or at what the talent shortage in China is costing the bank, she only says HSBC will stick to "benchmark prices" on the market and stresses that people the bank hires will be trained in both China and overseas.

Foreign institutions are taking steps to find and retain their best employees with diversified recruitment drives and significant salary boosts.

Standard Chartered keeps a close eye on salary fluctuations in the job market to keep salaries for its own employees competitive.

It has also diversified approaches to recruit candidates from universities, head-hunting agencies and job fairs, while enlisting the ones recommended by colleagues and people from outside of the banking industry.

At smaller overseas banks, which are at a disadvantage when competing with larger rivals, measures are being taken to counter the personnel gaps on the Chinese mainland.

"It is critical to build a pool of talent as we grow our business in China," says Leong Wai Leng, chairwoman of OCBC China, a Singapore-based bank.

"People are our most valuable asset."

Aiming to grow its China staff from 300 to over 1,000 by 2010, OCBC uses a three-prong approach to attract and retain talents.

For starters, the bank recognizes and rewards employees for outstanding performances, as well as grooming them for leadership roles in the bank.

"Our compensation package is geared towards rewarding our high performers through differentiated incentive compensation schemes, where we offer our high performers performance-based bonuses and various other incentives in addition to the market-oriented and competitive base pay," Leong says.

To attract employees, OCBC started several programs to allow employees to pursue a career in different divisions in order to help employees evaluate their strengths during their first 3 years with the bank.

HONG KONG -- Goldman Sachs Group Inc. named Cai Jinyong, an eight-year veteran of the firm, as chief executive of its Chinese securities joint venture and head of Goldman's China investment-banking business, according to an internal memo reviewed by The Wall Street Journal.

The promotion of Mr. Cai, who made partner in 2006, should bring some stability to the top ranks of Goldman's China operations after the departure of Richard Ong, its most senior Beijing-based banker, this month.

Mr. Ong, Goldman's co-head of investment banking in Asia excluding Japan, is leaving to help run a new private-equity fund raising over $2 billion. He will be joined by Fang Fenglei, the chairman of the joint venture, Goldman Sachs Gaohua Securities Co. Mr. Fang continues to serve as chairman of the joint venture, which was one of the first such Chinese JVs, formed in late 2004.

Mr. Cai will succeed Zha Xiangyang as CEO of the joint venture. Goldman said in the memo that Mr. Zha is leaving the firm. Mr. Zha didn't reply to an email seeking comment.

Mr. Cai, 48 years old, brings extensive China experience. He most recently led Goldman's team of China bankers dedicated to landing deals in oil, gas and power. Born in China, Mr. Cai earned a Ph.D. in economics at Boston University, graduating in 1990. He then worked for the World Bank, before starting his investment-banking career at Morgan Stanley.

BEIJING (MarketWatch) -- Barclays PLC (BCS:32.27, -2.66, -7.6%) plans to add capital and staff to its China operations, the state-run China Daily reported Thursday, citing bank President Robert Diamond.

Additionally, Barclays is seeking opportunities in China's retail and commercial banking sector, but local regulations have limited the bank's efforts, Diamond was quoted as saying.

China's regulations limits a single foreign institution's stake in local banks to 20%.

"We would like to be an active investor rather than a minor stakeholder," Diamond told the newspaper.

The report didn't give details of the bank's plans to boost staffing and capital.

SUZHOU, China: China Investment Corp., the $200 billion Chinese sovereign wealth fund, is hiring foreign fund managers to invest in hedge funds and private equity, as well as in traditional assets like bonds and shares.

Gao Xiqing, CIC's general manager, said Thursday that he hoped to hire the managers within the next few months.

Dozens of the world's leading money managers have been making presentations to CIC in Beijing in recent weeks in an effort to win coveted mandates to handle some of the fund's money.

"The hiring is going smoothly," Gao told reporters at a pension fund forum in Suzhou, near Shanghai. "The asset classes we are hiring managers for include the cash market, fixed income, equity and hedge funds.

"We will also be hiring managers for private equity."

China sets inflation as a top priority targetU.S. Federal Reserve chairman calls for action to help distressed homeowners and lendersSharp drop-off in spending by Japan's companies
According to media reports, CIC could plough about $4 billion into a private equity fund run by the former Goldman Sachs executive, Christopher Flowers, that will focus on financial institutions weakened by the global credit crunch.

China set up the sovereign wealth fund last September to earn greater returns on part of its $1.53 trillion of foreign exchange reserves, most of which is invested in safe but low-yielding U.S. bonds.

CIC will invest only a third of its initial money overseas. It has already spent most of the rest buying investment vehicles used by the central bank to recapitalize domestic banks.

The fund, which is also busy recruiting in-house staff, moved Tuesday into plush new offices in central Beijing.

CIC has had a rocky start, drawing fierce criticism for steep losses suffered on its maiden $3 billion investment in the U.S. private equity giant Blackstone Group.

The share price of Morgan Stanley has also fallen since CIC took a $5 billion stake in the U.S. investment bank in December.

Gao said he hoped to finish hiring external money managers within a few months.

"We must negotiate terms so it needs some time," Gao said.

The process could have been shorter if CIC had invited just a few firms to bid for the mandates.

But to ease the concern about a lack of transparency among sovereign wealth funds, CIC had invited a large number of asset management firms to apply, making selection a tougher task.

"Sovereign funds have come under a lot of pressure," Gao said. "In fact, we didn't need to invite everyone. We just needed to invite those top-performing ones. But we're doing so to show we have transparency."

Norway, Singapore and Abu Dhabi are also among the more than 20 countries with sovereign wealth funds. The International Monetary Fund estimates their worth at between $2 trillion and $3 trillion, a total that it says could reach $10 trillion by 2012.

Some Western critics fear state-owned sovereign funds will not invest for long-term commercial returns but for political purposes, building up stakes in leading companies that will give them influence in politically sensitive sectors.

The European Union said on Wednesday that sovereign funds were welcome to invest in the 27-nation bloc but that they should be more open about their motives and methods.

"Sovereign wealth fund countries must acknowledge that their growing weight in global financial markets brings responsibilities," said Joaquín Almunia, the EU's economic and monetary affairs commissioner.

Gao has said CIC would be a benign force in global markets, but that it was unfair to expect total transparency because of the commercial interests at its heart.

Zheng Bingwen, a pension fund expert at the Chinese Academy of Social Sciences, the government's top research institute, said at the forum that CIC's assets would expand rapidly, as China's foreign exchange reserves were likely to keep growing for the next 20 years.

By Yuan Zhaohui, Li Liming

The Agricultural Bank of China (ABC) has plans to become a commercial banking group and seperate its policy-oriented agricultural financing services from its main operations, according to sources.

Sources familiar with the Bank's reform plan said it would be splitting its services into agriculture and non-agriculture, with both having independent managements.

Sources close to the reform plan said it received preliminary approval before the Spring Festival but would ultimately need approval from China's two highest legislative conventions in March.

Meanwhile, lawmakers are still ironing out differences over the splitting of commercial and policy functions within the bank.

Scheme Gradually Unveiled
At a national financial conference held one year ago, the fundamental priorities of ABC's reforms were set as: to deal with the "three agricultural problems", namely, rural areas, farmers and agriculture; to introduce overall structural reforms; to operate in a commercial mode; and go public when appropriate.

According to a senior official who was engaged in drafting the reform, the ABC would be turned into a banking group. He added its subsidiaries would include a commercially operated holding company to be named Agricultural Bank of China Company Limited and another institution focusing on agricultural and farmers' needs in the rural areas.

The source said under this framework, the former would be targetting for market listing, while the latter's chance to become publicly listed was still under debate considering that it enjoyed government subsidies.

The agricultural-based services would also be reformed, added the source, saying that agro-financing would be developed in accordance with market economy instead of the government-administered model of the past.

The ABC's 2006 annual report showed that 60% of its branches and 51% of its employees were located in county-level administrative regions, and by the end of 2006, agriculture-related loans and those offered by county-level branches totaled 1.7 trillion yuan--55% of all loans that year.

The ABC's management believed that it was on par with the other three major state-owned banks to compete in the more developed coastal regions. For example, in Suzhou of east China's Jiangsu province, ABC has had more market share and higher profits than the other three.

As the backbone of China's rural banking system, the ABC would require approval from various related agencies before it could implement the reform scheme, including the Ministry of Finance (MoF), its former investor; the central bank, the coordinator of state bank reform; the China Banking Regulatory Commission (CBRC); the National Development and Reform Commission (NDRC), the Ministry of Agriculture (MoA), and the Central Huijin, which would inject 40 billion yuan into the ABC.

A source close to regulators said the above agencies had given preliminary approval to the scheme before the Spring Festival, and that it would be publicized if passed by the two highest legislative conventions in March--the National People's Congress and the Chinese People's Political Consultative Conference.

After all the Efforts
When he visited Gansu province in late November last year, the Bank's president Xing Junbo noted that it was their obligation to support agricultural issues. By October, the Bank had already established "trial bases for agricultural banking services" in seven provinces, including Gansu and Sichuan.

Chen Xiwen, head of China's rural work office, said recently Chinese banking institutions were focusing more on the urban areas. He stressed the needs for ABC to have a special mission in developing rural areas.

However, commercial banks could not ignore profits, he said, as the ABC needed to maintain solid performance in order to satisfy its shareholders after the reform. He added the government should provide preferential policies for ABC in view of the demands placed on the bank to promote agriculture.

Early in mid 2007, the Central Huijin had decided to invest 40 billion dollars in the Bank, but to wait for the latter's reform scheme to be publicized before going ahead with it. In the first half of 2007, regulatory bodies, including the central bank, the NDRC, the MoF, the CBRC launched an investigation into the reform and wrote research reports to serve as the basis for reforms.

After resigning from the central bank and being appointed as president of Agricultural Bank last July, Xiang Junbo shifted the Bank's first priority to jumpstarting reforms as soon as possible. Late last year, the central bank president Zhou Xiaochuan revealed that the Bank's reforms had entered a decisive phase. As rumors about the reform spread, Bank spokesman Zhou Qingyu replied on February 3rd that the scheme was still being studied.

Based on the experiences of the other three state-owned banks, which have already been reformed into holding companies, if the scheme was approved by the two sessions, ABC would be able to restructure its financial mechanism, introduce the shareholding system and strategic investment, and go public.

Sources said the bank had employed Central Huijin, CITI Securities and two auditing teams to prepare for its domestic IPO; while Morgan Stanley had been shooting to work on its overseas IPO.

Disagreement Remains
Sources said disagreements remained, mainly on how to ensure both commercial operations and support for agriculture.

To better serve agricultural issues, the banks worked out the "Implementation Scheme of Serving the Three Agricultural Problems" last year. According to that scheme, funds raised by county-level branches would mainly be used for agricultural purposes and economic development of the county; with main services covering agricultural production, small and medium rural companies, modern agriculture, infrastructure of rural areas, and development of small towns.

The above-mentioned senior official voiced his concern, saying, "whether there will be risks after a separate agricultural service is established remains an unsolved question."

There have been relatively few customers in rural branches. In recent years, with many branches having focused on deposits, debt collection, and intermediary services, their credit management teams have been dismissed, leaving most of them simply "deposit institutions".

"It's still not clear how the agricultural service will operate," said the above source. In their opinion, wholesale services may be an option, as "there are already many grassroots organizations, such as rural credit cooperatives, small banks at the village and town level, and micro-credit companies. The bank could provide them wholesale loans and let them do the job instead."

"The biggest problem lies in strategy rather than management," said an official of one supervising agency, adding that even if the decision makers agreed on the scheme, the contradiction between agricultural issues and commercial operations persisted. Its goal of "serving the three agricultural problems" might lead to losses, making the Bank a burden for the government.

Citigroup has agreed with a Chinese partner to establish a mainland investment banking joint venture with Central China Securities, a mid-sized brokerage, ahead of an expected opening of the sector to more overseas participation.

The venture is expected to apply for regulatory approval in the coming weeks, and comes as Beijing is poised to relax a two-year ban on foreign investment in the country’s booming domestic securities industry.

Citi’s move follows those of Credit Suisse and Morgan Stanley, which last month signed separate agreements with Chinese partners to establish mainland investment banking joint ventures. If approved, the JV would become the latest plank in Citi’s mainland platform, which features a stake in Shanghai Pudong Development Bank, de facto control of Guangdong Development Bank and its own retail branch network.

Merrill Lynch is seeking to expand its presence in emerging market economies such as Brazil, Russia, India and China as it looks for new sources of growth to mitigate the downturn in US markets, John Thain, Merrill Lynch’s chief executive, said on Wednesday.

Speaking as Merrill Lynch opened a new office in Moscow, Mr Thain said the bank’s shift towards the so-called Bric economies would mean that overall headcount at the bank would not decrease even as it slashed about 1,000 staff at its mortgage and fixed-income divisions at home due to the subprime crisis amid fourth-quarter losses of $9.8bn.

“As the US economy slows, we are looking for growth prospects outside the US. The Bric economies are going to continue to grow ... Russia is one of the most important places.”

Wall Street banks have been pouring resources back into Russia over the past year, prompting hiring wars for a small pool of Russia experts and sending salaries soaring. Last year saw $42bn in Russian IPOs in London and Moscow and bankers expect the volume could reach up to $50bn this year.

Merrill Lynch was Russia’s top M&A adviser last year, according to Dealogic, winning $64.3bn in deals, nearly a third of the total.

Russia’s energy-driven equity markets have been seen by investors as a relatively safe haven.

Mr Thain said Russia was more protected than other world markets, including emerging ones. “No one is immune from the global slowdown. But Russia is probably more insulated than other Bric economies.”

HONG KONG -- Executive hiring by multinationals in Japan is set to reach a six-year high this quarter but a global credit squeeze will affect staffing plans at IT and finance firms in Hong Kong, according to a survey by recruitment firm Hudson.

The report was slightly less upbeat than a previous survey three months ago because hiring expectations in China and Singapore have dipped. Hudson said rising concern that the United States is heading for a recession would make banks and finance firms in the region more cautious about hiring.

Still, 66 percent of managers at multinationals in Japan expect to increase recruitment this quarter, according to the survey released on Thursday, up from 65 percent three months ago and the highest level since the Hudson report was launched in late 2001.

In China, 61 percent of managers at multinationals plan to increase headcount in the next three months, down just slightly from 64 percent in the previous quarter.

The survey by Chicago-based Hudson Highland Group Inc. covered responses from 2,500 managers at multinational companies across industry sectors in China, Hong Kong, Japan and Singapore.

"The market in Asia is still looking buoyant and it is quite separate from issues in the United States," said Gina McLellan, Hong Kong manager for the US firm.

"But from February to April we'll start to see the actual size of bonuses and whether recently announced global headcount cuts by some investment banks will come in Asia."

Asia's financial services sector is booming, helped by China's and India's rapid economic development, and international finance companies are expanding in the region.

JP Morgan says it could hire up to 1,900 people in Hong Kong in the next three years and Credit Suisse plans to hire at least 70 bankers in the Asia-Pacific this year.

However, there could be job losses too in financial centres Hong Kong, Singapore and Tokyo as investment banks including Citigroup, Lehman Brothers and UBS have announced plans to lay off thousands of staff worldwide in the wake of the credit squeeze, even though those cuts are likely to focus on the United States and Europe.

In Hong Kong, 58 percent of managers surveyed plan to add staff this quarter, up from 54 percent three months ago, but nearly a third of IT&T companies and 23 percent in finance and banking say the global credit squeeze triggered by problems in the US subprime mortgage sector would have an impact on hiring.

In Japan, 12 percent of managers across sectors say hiring plans will be affected by the credit squeeze compared with less than 10 percent in Singapore and China.

"Hiring expectations remain at a high level in all the markets surveyed and the outlook is positive," McLellan said. "But employers are caught between sharply rising salaries and bonuses on one hand and high staff turnover rates on the other. This is most marked in China."

The survey showed a third of managers in China expect to increase managers' starting salaries by more than 20 percent to attract candidates and 47 percent reported turnover rates above 10 percent.

In Singapore and Hong Kong, 19 to 20 percent of managers said they had to offer pay increases of more than 20 percent but in Japan only 4.0 percent of managers saw such a need.

BEIJING (XFN-ASIA) - China Investment Corp (CIC), the 200 bln usd fund set up to invest the country's foreign exchange reserves, has kicked off a global recruitment drive for senior staff, the Wall Street Journal reported.

The report said CIC's requirements for Beijing-based positions include overseas education and market experience, and specified openings for portfolio managers for North American, European and Japanese equities and fixed-income products including derivatives.

It said CIC may allocate a third of its assets for investments in global financial markets.

andrew.pasek@xinhuafinance.com

As part of an agreement with Southwest University of Finance and Economics, Kaplan, Inc., together with its affiliate Kaplan ACE, will establish a financial training center that will provide internationally-recognized financial qualifications and on-the-job training to students in western China.

Kaplan is one of the world's leading providers of financial services education, with centers in the U.K., U.S., Australia, Hong Kong, and Singapore. Located on the campus of Southwest University of Finance and Economics, the new center will offer training programs for qualifications such as the Association of Chartered Certified Accountants, Chartered Financial Analyst, Certified Financial Planner, and Financial Risk Manager. It will also host forums that will cover current economic trends.

Professor Xiao Ma, vice principal of SWUFE said, "In order to achieve steady and rapid economic development, it is critical that China's accounting and financial professionals meet international standards. This training center will help ensure that China's most talented accounting and financial professionals are qualified in the global marketplace; it will also promote financial development in western China."

In 2006, Kaplan provided approximately 600,000 licensing and continuing education courses to corporate clients and professionals around the world. Mark Coggins, president of Kaplan Asia Pacific, said, "We're excited to be a part of Chengdu's emergence as an important financial center in western China."

Kaplan is a leading provider of educational services to individuals, schools and businesses, serving over one million students annually with operations in more than 30 countries around the world. Its international programs include higher education, test preparation, language instruction and professional training.

INDUSTRIAL and Commercial Bank of China Ltd has "insufficient" assets overseas and seeks more investments abroad, President Yang Kaisheng said, even as he denied the lender plans to buy a stake in Standard Chartered Plc. "ICBC will pursue a combined strategy of acquisitions and new projects in expanding overseas," Yang said at a finance conference in Beijing on Saturday. "Overseas diversification is an important way for Chinese banks to spread risks against cyclical economic downturns."

Having raised US$22 billion in the world's largest share sale a year ago, ICBC, the world's biggest bank by market value, is expanding more aggressively than peers such as Bank of China Ltd. ICBC's 36.7 billion rand (US$5.4 billion) purchase of a 20-percent stake in South Africa's Standard Bank Group Ltd is the biggest overseas investment by a Chinese company.

"Overseas expansion is likely to continue as Chinese banks are seeking to build up their global presence," Bill Stacey, a Hong Kong-based analyst at Credit Suisse, told Bloomberg News yesterday, citing ICBC's forays in Indonesia and Macau. Yang joined China Construction Bank Corp Deputy President Luo Zhefu in denying a newspaper report that their banks planned to acquire a stake in Standard Chartered Plc from Temasek Holdings Pte, the Singaporean government's investment company.

"We have no plans to buy a stake in Standard Chartered," Luo said, while Yang said the report was "just a rumor."

The Financial Times reported that China's three biggest banks - ICBC, Construction Bank and Bank of China - had approached Temasek to buy a 17-percent stake.

CITIGROUP Inc replaced David Bushnell as chief risk officer, two weeks after the largest United States bank said writedowns on mortgage-related investments may lead to its first quarterly loss since at least 1998.

Jorge Bermudez, 56, whose 30-year career at Citigroup includes experience in risk management and operations, takes over for Bushnell effective immediately, the New York-based bank said in a statement. Bushnell, 53, a 22-year veteran who also serves as chief administrative officer, will retire on December 31.

Bushnell is at least the fifth executive to be forced out or reassigned at Citigroup as this year's credit-market turmoil in the US ravaged the bank's investments in subprime mortgages and related bonds. The company's board ousted Chief Executive Officer Charles Prince on November 4, three weeks after Prince himself replaced three top trading executives.

"They're addressing a situation that should have been addressed two years ago," William Smith, who manages about US$80 million, including 71,000 Citigroup shares as president of Smith Asset Management, told Bloomberg News. "Heads have to roll, and Bushnell's head was next to roll."

The company's stock has tumbled 39 percent this year.

Citigroup said earlier this month bad subprime investments might result in as much as US$11 billion of writedowns this quarter. The losses are on top of US$3.15 billion of writedowns on subprime mortgages and leveraged loans reported for the fourth quarter.

Blackstone Names Andrew Kuo Managing Director and Vice Chairman of Greater China

October 22, 2007: 08:20 AM EST

NEW YORK (Associated Press) - Investment firm Blackstone Group LP said Monday it named Andrew Kuo its managing director and vice chairman of its Greater China division.

Kuo will primarily work on sourcing and managing private equity deals, but will assist other business divisions in the region as well.

"His experience in both direct investment and investment banking will be very useful to us as Blackstone expands its Asian franchise," Stephen Schwarzman, Blackstone's chairman and chief executive, said in a statement.

Prior to joining Blackstone, Kuo worked as managing director and head of Greater China for private equity firm H&Q Asia Pacific.

In an unusual move, a major Chinese investment bank is starting an aggressive recruitment campaign in the U.S.

Traditionally, Chinese financial institutions had no trouble staffing up at home. Now, however -- amid a spate of major Chinese-company IPOs both at home and abroad, and increased cross-border deal-making -- the banks are looking to bring in more international experience.

Earlier this month, China International Capital Corp. kicked off its U.S. headhunting trip in New York at a Ritz-Carlton hotel near Wall Street. More than 100 professionals, mostly overseas Chinese, were invited. Senior CICC executives touted opportunities represented by China's booming capital markets.

Ding Wei, head of the investment-banking division, said the firm is looking to hire about 200 people by year end, expanding the team to 1,000. "We are looking for all kinds of talent" in risk management, product design, structured finance and even administrative posts, he said.

The CICC recruiting team next plans to head to the Wharton School of the University of Pennsylvania and other business schools in the U.S.

In the past, CICC has been famously low key. Set up in 1995 as a joint venture between China Construction Bank Corp. and Morgan Stanley's Morgan Stanley International Inc., it was China's first foreign-funded investment bank. The purpose was to set up a government-backed firm that could learn from the top-tier Wall Street firms and provide a template for future Chinese investment banks.

Mr. Ding said CICC estimates this year's revenue to be $600 million to $700 million, growing from 2006's $450 million.

BEIJING - "When I hit the big time, I will buy a BMW-7 series car as my marriage dowry," said sparkling 22-year-old Jian Jingtao. "I'll give it to my fiance to show him how much I love him."

In China, the cheapest BMW-7 series model costs nearly 1 million yuan (US$133,000) while the average annual income for urban residents nationwide was only 12,000 yuan in 2006.

Jian, a civil servant in the southwestern province of Sichuan, makes about 1,200 yuan a month, and she also works as a part-time weather girl at a TV station in Liangshan Yi Autonomous

Prefecture, an impoverished region in Sichuan, where most people haven't even heard of BMW. The part-time job doesn't bring her much money.

Then, how can she possibly realize her dream? Well, instead of counting on her part-time job, she has other ideas.

"I'm taking the Chartered Financial Analyst [CFA] test and I've passed level II," says Jian, her eyes shining with hope. "Just one step away from the best financial institutions."

She believes getting a job in such institutions will mean she is one step closer to her dream car.

Official data suggest that staff workers in China's well-known financial institutions make 15,000 yuan a month and more. And jobs in the financial sector have being taking the lead, driven by the basic principle of a market economy's supply and demand.

About 45 million people will join the labor force in the next five years in China, but many of them will have to take jobs as laborers and construction workers and make just 800 yuan a month.

When lecturing in China's leading Tsinghua University, China Construction Bank (CCB) chairman Guo Shuqing testified that the most troubling problem facing his bank in its "go overseas" strategy is a shortage of talented professionals.

CCB, one of China's "Big Four" state-owned commercial banks, wants to set up branches in New York and London, Guo told the students, adding that the bank is "hungry for people specialized in financial accounting, securities analysis, portfolio management, interest rate pricing and foreign exchange pricing".

China, the world's fastest-growing economy with an annual gross domestic product (GDP) growth of almost 10% for the past 10 years, has long been considered the world's factory, producing about 75% of the world's home appliances, for example.

But as the country moves to a more market-oriented financial system, financial talent is at a premium because there are many issues to deal with.

As a major reform in the financial sector, China dropped its currency peg to the US dollar in July 2005 and linked the yuan to a basket of foreign currencies, allowing it to float in a 0.5% band (which was expanded to 0.5% this year) around the official central parity.

"Everything changed when they expanded the fluctuation range to 0.5%," says textile trader Wei Changshan from Beijing-based Dongxing Textile Co. "I'd really like to hire someone to tell me about how to manage it."

In July 2005, one US dollar could be exchanged for 8.28 yuan. On September 21 this year, the same dollar could be bought for just 7.51 yuan.

Hearkening to overseas comments, Yi Gang, assistant governor of the People's Bank of China (PBoC), the country's central bank, said that the exchange rate of the Chinese currency would gradually become more flexible.

As for the stock market, the benchmark Shanghai Composite Index surged by more than 130% year-on-year in 2006 after a five-year bearish market, thanks to reformed securities regulations and continuing strong economic growth. China's stock market is now the largest in Asia by market capitalization.

As new regulations come into play concerning foreign investments, Chinese fund managers and securities traders would like to compete with overseas competitors. The lack of financial talents seems serious.

A recent government document on qualified domestic institutional investors (QDII) allows domestic fund management and securities companies to follow commercial banks into the arena of overseas securities.

"We started preparing for QDII products nearly six months ago," said Xu Xiaosong, vice general manager of China Southern Fund Management. "So we are recruiting. Unfortunately we are not the only ones. A number of big securities companies are looking for people," said a fund manager who asked to remain anonymous. "It's simple. If we want to win the competition we need the best team."

Not surprisingly, foreign banks are also on the lookout for qualified people in China. In 2005, the Bank of East Asia opened personal services, the first to do so in China.

In the China-US Strategic Economic Dialogue held in May, China agreed to allow foreign banks to issue their own yuan-dominated credit and debit cards. The move is seen as a way of boosting fair competition between local and foreign financial institutions.

At the third national conference on financial work early this year, Chinese Premier Wen Jiabao said that China would facilitate fair competition between domestic and foreign financial institutions.

As the government opens the banking sector to meet its World Trade Organization commitments, the human resources battle for the best and brightest in the financial sector has escalated as well.

HSBC expects to grow its headcount from 3,000 to 4,000 in China this year and Citigroup plans to hire about 1,000 extra people. Standard Chartered said it did not have a specific target this year but hired 1,000 in 2006.

Finding enough experienced staff and training them adequately is the toughest issue confronting the bank, HSBC China chief executive Richard Yorke said earlier this year.

"There is no real finance education in Chinese colleges," noticed Wang Zhao, an economist with Beijing University's China Center for Economic Research. "The so-called finance [education] in colleges only consisted of macro-control measures, such as monetary policy, that hark back to the days of the planned economy. What Chinese students want now is courses on securities analysis and portfolio management," he said.

A recent international survey released by Deloitte Consulting found that two-thirds of the 636 senior finance executives surveyed thought the supply of high-quality talent in Asia was limited or inadequate.

"The crucial but tricky part is that you have to master international practice as well as the local reality," managing director for Asia-Pacific Operations CFA Institute Jane Squires commented.

"This year, 10,200 people signed up to take the CFA test in China, up 30% from last year," Squires said. "We can reasonably project that there will be 600 more CFA holders at the end of 2007."

"I can't say how many financial experts China needs but one thing is certain, there is plenty of room for those who have the capacities. The United States currently has 44,220 people who hold the CFA qualifications. In comparison there are 3,650 in Hong Kong, 2,133 in Singapore and just 1,086 in China," she said.

China has outlined its new policies for the financial sector, including deepening the reform of state-owned banks, facilitating rural financial reforms, and steadily pushing forward the reform of foreign exchange rate.

The country's financial sector is set to speed up as the market continues to swing open. In that case, Jian Jingtao, the young lady with so many traditional Chinese virtues, has an excellent chance of realizing her dream and the dream of her lucky boyfriend, probably with a little help in the shape of a bank loan.

Hong Kong's seasonally adjusted jobless rate nudged up from 4.1 percent in the May-to-July period to 4.2 percent from June to August, officials said yesterday. Increases in the jobless rate were experienced mainly in the communications, real estate and wholesale trade sectors, the Census Statistics Department of Hong Kong said.

Decreases in the underemployment rate, which held stable at 2.3 percent, were seen mainly in foundation and superstructure construction, and communications sectors, offsetting increases in welfare and community services and retail trade. Total employment grew by about 10,100 from 3,494,200 in May-July to an all-time high of 3,504,300 in June-August. Over the same period, the labor force swelled by about 18,500 from 3,652, 200 to a new high of 3,670,700.

THE Bank of Beijing said today it will open subscriptions to retail investors next Tuesday (September 11) for its initial public offering of 1.2 billion A-shares in Shanghai.

The third to-be-listed Chinese city commercial lender will sell up to 840 million shares, or 70 percent of the offering, to retail investors. The remaining 360 million shares, or 30 percent of the offering, will be sold to institutional investors, the Beijing-based bank said in a statement to the Shanghai Stock Exchange today.

Institutional investors can subscribe to the shares during the two-day period ending next Tuesday.

The bank will announce a price range next Monday and post the final price next Wednesday.

``The bank is among the top 15 players among the country's 110-plus city commercial banks,'' said Qiu Zhicheng, a Haitong Securities Co analyst.

The bank said in the prospectus yesterday that it will conduct an H-share IPO at an appropriate time after completing the A-share sale, without giving a timetable or sale scale.

Any sale of H-shares would need approval for existing shareholders.

The lender gained approval from the China Securities Regulatory Commission for the Shanghai share sale at the end of August. The listed shareholders of the lender, including Tongfang Co and UFSoft Co, all surged on the bank's announcement it would go public.

Citic Securities Co and its affiliate, China Securities Co, are the lead underwriters for Bank of Beijing's A-share listing. Shanghai-listed Citic Securities holds a 60 percent stake in China Securities.

Bank of Ningbo and Bank of Nanjing -became China's first two listed city banks early last month. The two banks listed on July 19, after raising a combined 11.07 billion yuan (US$1.47 billion).

SHANGHAI, China (Reuters) -- China's money market is an opaque, primitive place where fund flows are dominated by a few big state-run banks, and there's not even a standard commonly accepted yield curve.

But for Raymond Hui, Head of Treasury for China at Societe Generale and one of Shanghai's most experienced foreign bank traders, the market is starting to deliver on the promise that brought him here four years ago.

"The market is getting more open and transparent. Foreign banks' involvement is larger and deeper," says the Hong Kong native, who joined SG to set up its Shanghai dealing room in 2003.

"The price discovery system is now much more efficient because of the central bank's new market making system -- and this has made both foreign and Chinese banks more interested in fixed income, increasing bill and bond trading."

Hui's experience suggests millions of dollars spent by foreign banks to break into the Chinese money market, and years of frustration due to regulatory obstacles and the difficulty of training staff may finally be proving worthwhile.

When Hui arrived in Shanghai in 2003, he recalls, it was difficult even to get accurate price quotes from the market. Foreign banks, without knowledge of some of the biggest fund flows, were largely relegated to the sidelines.

"Chinese bank dealers all know each other, and debt trading information was only passed around their circle," says Hui, who is in his 40s and worked for Japanese and European banks in Hong Kong before joining SG.

Even basic trades such as interest rate swaps, bond forward deals, bond short-selling and open-ended bond repurchase agreements did not exist.

Authorities have opened all of those areas over the past couple of years, though restrictions, red tape and lack of familiarity still keep volumes low in most.

A big development came in February when the central bank expanded its system of interbank market makers in bonds, letting the top 80 bond trading firms in China apply. Previously, only the 20 most active spot traders had this status.

This stimulated turnover and gave foreign banks a bigger role. Foreign banks held 0.9 percent of the 10.6 trillion yuan ($1.4 trillion) of outstanding Chinese bonds in July -- a big rise from 0.4 percent at the end of 2006, official data shows.

Four years ago, there were only a couple of overseas bankers at foreign institutions in Shanghai focusing on treasury and derivatives trade, traders say.

That has risen to about 30 now. Including local staff, foreign banks' treasury operations are estimated to employ several hundred people -- a far cry from the thousands in London or New York but enough to make them a force in the market.

SG's Shanghai treasury operation has expanded from one person when Hui arrived to eight, and he is about to add another sales person.

Key to growth is the way in which new money market products have increased interaction between Chinese and foreign banks as they leverage off each others' strengths, Hui says.

Foreign banks are keen to make markets in new products because of their superior knowledge, gained from overseas, of the technical aspects. Chinese banks have the advantage of a big base of end users through huge domestic branch networks.

A growing two-way flow of staff between foreign and local banks, while a headache for personnel managers, is making trade easier by spreading both local knowledge and foreign expertise.

A bear market in bonds since early this year, as the central bank tightens monetary policy, may actually be helping develop the money market by making the old buy-and-hold strategy of Chinese banks less attractive.

Foreign banks have been able to jump in to make money from changing spreads along and between curves, and from arbitrage trades involving IRS and forex swap deals.

Hui expects the market to deepen further in the next few years as authorities introduce products such as bond futures, interest rate futures and forward rate agreements, which could smooth distortions in yield curves through arbitrage.

An expected surge in corporate bond issuance, after Beijing said this year the securities regulator would take over supervising that market, will be another opportunity.

But the biggest spur to foreign banks may be their incorporation within China, which lets them conduct yuan retail banking business and open more branches.

More than 10 foreign banks have incorporated locally this year and about a dozen more, including SG, are in the process of obtaining approval.

Though foreign banks will probably always have much smaller Chinese branch networks than the local giants, they will be able to expand their deposit bases and issue yuan bonds -- obtaining funds for investment in the money market.

"I believe one of the factors that attracted us to take the local incorporation step is the ability to issue bonds," Hui says, adding that SG has no concrete plan for a bond issue. E-mail to a friend

Standard Chartered Bank, one of the first foreign banks to incorporate in China, is planning a 66 percent increase in staff and to expand its branches by a third by the end of the year.

"We are on track with our branch expansion, with 30 locations in 15 Chinese cities, and still plan to have about 40 locations by the year end, subject to the regulatory approvals," said group chief executive Peter Sands in a statement on the bank's mid-term business report.

The bank planned to recruit another 1,400 people to bring staff numbers in China to 3,500, Sands added.

Standard Chartered has opened an operations center in Tianjin, a municipality striving to become an economic center in north China.

Sands said Standard Chartered in China more than doubled its income in the first half, without giving details.

The bank's first-half operating income rose 28 percent to 5.2 billion US dollars and total assets jumped 25 percent to 297 billion dollars, the report revealed.

The London-based bank, which does most of its business in Asia, and three other foreign-funded banks -- HSBC, Citibank and Bank of East Asia -- officially began business in China four months ago as the first locally incorporated overseas financial companies approved by China's banking regulator.
It means that the four banks can compete with their Chinese counterparts on an equal footing, analysts say.

Foreign banks were previously restricted to offering foreign-currency services to individuals, although they could provide both local and foreign-currency services to companies.

China fully opened its banking sector to foreign banks in December last year in line with its commitments to the World Trade Organization.

SHANGHAI: Wall Street bank JPMorgan said on Monday that it had won final approval to set up a wholly owned unit in China to strengthen its wholesale banking business in the world’s fastest growing major economy.

This move will make JPMorgan the second US bank to incorporate in China, after Citigroup did so early this year, while more than a dozen foreign banks queue to secure regulatory approval for their China-incorporated units.

Most foreign banks choose to incorporate in China because they want to tap the country’s retail banking sector through fast branch expansion across the country. Local incorporation makes it much easier for foreign banks to apply, to open new branches and offer a full range of local currency-denominated retail banking services to Chinese customers.

However, JPMorgan said it would still focus on its wholesale banking business — such as trade finance, cash management and financial derivatives — but may tap the retail market when it finds the right opportunity.

“We do see that China’s consumer banking and card markets have great potential for growth and we are very optimistic on the future growth of the market,” Charles Li, JPMorgan China chairman, said. “We would like to consider exploring the opportunities if we could find the right approach.”

Besides expanding the wholesale banking business in China, JPMorgan is making efforts to win underwriting deals for Chinese companies’ overseas listings. Currently, JPMorgan does not have any retail business outside the United States. China fully opened its banking markets to overseas lenders late last year, as part of Beijing’s commitment to the World Trade Organisation, which it joined in 2001.

Foreign banks not incorporated domestically are not allowed to issue bank cards independently and are required to impose a minimum deposit of 1 million yuan ($1,32,200) on retail customers. “The local incorporation won’t immediately accelerate the pace of growth and lead to aggressive recruiting of branch expansion,” said Mr Li.

“However, there is no doubt that the incorporation will form a strong foundation for progressive and long-term expansion.” JPMorgan will locate the headquarters of its China-incorporated subsidiary in Beijing, making it the first foreign bank to incorporate in China’s capital instead of Shanghai, the country’s financial hub.

JPMorgan currently operates three branches in first-tier Chinese cities including Beijing, Tianjin and Shanghai. “After local incorporation, all the three branches will be fully licensed for local and foreign currencies and products, and all branches will have a derivatives licence,” Carl Walter, JPMorgan China’s chief operating officer said.

According to China Times, the China Insurance Regulatory Commission has approved the establishment of Taikang Pension Insurance in Beijing this September.
The pension insurance firm, founded by Taikang Life Insurance and Taikang Asset Management and headed by Ma Yun, vice president of Taikang Life Insurance, has a registered capital of 200 million yuan (US$ 26.4 million) and mainly focuses on group pension insurance and enterprise annuities.

Sources from the new company said currently the company has decided upon its management while the process of recruiting talent is still underway.

By Cathy Chan

July 12 (Bloomberg) -- Goldman Sachs Group Inc., the world's most profitable investment bank, couldn't name the co-head of investment banking in Asia as chief executive officer of its Beijing joint venture because his knowledge of Chinese was too weak, three bankers at the firm said.

Richard Ong, an ethnic Chinese born in Malaysia, didn't write Chinese well enough to take a mandatory test for senior managers, said the bankers, declining to be identified as the matter is private. New York-based Goldman instead promoted Zha Xiangyang, deputy CEO of its China joint venture, Goldman Sachs Gao Hua Securities Co., in May.

Government rules requiring language skills may hurt investment banks' efforts to attract top employees to China, the world's fastest-growing major economy. New York-based Citigroup Inc., Morgan Stanley and JPMorgan Chase & Co. are seeking joint- venture partners in the nation, where a record $16.3 billion was raised in stock sales during the first half of 2007.

``When you start putting a language requirement on it, it dramatically reduces the pool'' of talent, said George Fifield, managing director of Korn/Ferry International Consulting (Beijing) Ltd. ``It's going to diminish the quality of the team, whether it's on the board or the senior management.''

China began requiring senior executives to take the test in 2004. Managers in place before then have until 2009 to pass the exam before losing their titles.

Stricter Enforcement

The language requirement applies to CEOs, deputy CEOs and the heads of supervisory boards at locally incorporated securities firms, according to the industry regulator. The test includes both written and verbal components.

The China Securities Regulatory Commission has stepped up enforcement since December, though it can still grant exemptions for foreign executives. The financial watchdog said Nov. 30 it would punish securities firms that appoint managers who haven't passed the exam. The regulator wasn't more specific.

Goldman, the world's biggest securities firm by market value, moved Ong, 42, to Beijing from Singapore last year to head its China operations after former Asia co-head of investment banking Bill Wicker moved back to New York and Goldman China CEO Joseph Stevens quit in October to join Standard Chartered Plc, the London-based bank that makes most of its money in Asia.

Ong, who headed the Singapore office for about four years, declined to comment, as did Goldman spokesman Edward Naylor. The CSRC didn't respond to faxed questions.

Zha, 40, is a co-founder of Chinese brokerage Gao Hua Securities Co. Gao Hua owns 67 percent of Goldman Sachs Gao Hua and Goldman controls the rest.

Goldman and UBS

Goldman is the No. 3 foreign underwriter of stock sales in China and Hong Kong this year, after Morgan Stanley, the second- biggest U.S. securities firm, and Zurich-based UBS AG, according to data compiled by Bloomberg.

Goldman and UBS, Europe's largest bank by assets, are the only foreign investment banks licensed to underwrite domestic share sales in China, where the economy expanded at 11.1 percent in the first quarter from a year earlier. Executives at Citigroup, the biggest U.S. bank, JPMorgan, the third-largest, and Morgan Stanley have said the companies are seeking partners in China.

China's enforcement of language testing is part of a plan to give locals increased access to top positions at securities firms. The rule sets China apart from Japan, another Asian nation where English proficiency is low.

Mark Branson, CEO of UBS's Japanese securities venture, and Federico Sacasa, president of Aozora Bank Ltd., controlled by New York-based buyout fund Cerberus Capital Management LP, are among senior executives in the nation who don't read or write Japanese.

UBS has mainly hired locally. Chinese executives at its venture include Chairman David Li.

``Goldman shouldn't have appointed someone who doesn't read or write Chinese to head its China business in the first place,'' said Guo Ming, managing director of human resources consultant EAL Consulting in China.

July 4 (Bloomberg) -- Profit growth at Citigroup Inc., ABN Amro Holding NV and other foreign banks in China tripled this year after they were allowed to offer local-currency services, a central bank report said.

Overseas banks earned a combined 3.05 billion yuan ($401 million) in the first five months, up 43 percent from a year earlier, the People's Bank of China said in a research report published by China Securities Journal. Profit growth accelerated from an average 14 percent over the past five years.

China fully opened its banking industry in December, sparking a rush among foreign banks to add outlets and workers to compete for the nation's $2.2 trillion of household deposits. They're still dwarfed by the likes of Industrial & Commercial Bank of China Ltd., which earned 18.7 billion yuan in the first quarter.

``A rising tide lifts all the boats,'' said Zhang Xi, a banking analyst at Beijing-based Galaxy Securities Co. ``Foreign banks will never achieve the economies of scale to pose a serious challenge to domestic rivals given their current speed of expansion in China.''

As of May 31, 75 foreign banks operated 186 outlets in 25 Chinese cities, according to the report. They had 514.3 billion yuan of outstanding loans and 305 billion yuan of deposits. Their non-performing asset ratio stood at 0.6 percent at the end of May.

Beijing-based ICBC, China's largest bank and the world's No. 2 by market value, operates about 18,000 branches in China and has more customers -- 153 million -- than Russia has people.

Better Than Ever

Overseas banks may have overtaken domestic rivals in profit growth in an economy forecast by the central bank to expand 10.8 percent this year. Earnings growth at China's publicly traded banks averaged 29 percent in 2006, according to UBS AG.

The economic growth forecast, published by the central bank on June 29, represents the fastest pace since 1995, when the economy was less than a third of its current size. Overseas banks' combined profit from local-currency services more than doubled to 1.3 billion yuan through May, today's report said.

``Business has never been so good,'' Jeroen Drost, ABN Amro's Asia chief executive, said in an interview yesterday. ``The key challenge here is to keep up with the growth.''

Foreign banks expect to double their total workforce in China to almost 36,000 by 2010, according to a survey by PricewaterhouseCoopers LLP published in May. HSBC Holdings Plc, Citigroup, Standard Chartered Plc, Bank of East Asia Ltd. and eight others have become locally incorporated to offer yuan- denominated bank cards and mass-market services this year.

Capital Controls

China's restrictions on capital outflows -- individuals can't freely invest in overseas stocks, for example -- means banks such as Citigroup and HSBC can't fully capitalize on their international reach, said Zhang.

``High-end customers want access to global asset allocation to diversify risks, but that can't be achieved under the current capital control in China,'' she said. ``That's blunted foreign banks' edge.''

HSBC, Europe's biggest bank by market value, plans to add 30 outlets in China this year and hire 1,000 people a year in 2007 and 2008. It has 35 branches on the mainland, the most of any foreign bank. The bulk of HSBC's 2006 income in China came from corporate and commercial banking with Chinese and foreign clients.

London-based Standard Chartered aims to double its number of China outlets to 40 by the end of this year and Citigroup plans to add 14 outlets to take the total to 30.

Countermeasures

Foreign lenders controlled 2.1 percent of China's $6 trillion of banking assets and less than 1 percent of total deposits, the central bank report said. Their combined profit accounted for 1.2 percent of the total earned by banks in China.

Citigroup, HSBC, Bank of Tokyo Mitsubishi UFJ Ltd., Mizuho Financial Group and Hong Kong's Bank of East Asia Ltd. are the five biggest foreign banks operating in China.

China is letting state-owned banks expand into broking, fund management and insurance, winding back former premier Zhu Rongji's 1993 restrictions, to help them counter overseas competition. The government wants fee-based services to account for 50 percent of revenue at domestic banks over the next five to 10 years, up from the current 17 percent.

MUCH has been said recently about domestic retail banks doing all they could to pacify unhappy customers who suffer long hours of waiting in line.

Major domestic banks are now three months into their campaign to improve their customer service. I decided to make some observations to see if what we read and hear are what we get.

My first stop was at a China Construction Bank branch in Shanghai. Certainly fewer customers were in queue but only two counters were open during lunch hours. Behind the two cashiers were empty chairs.

Why do the bank's staff have to go for lunch together? Must lunch hours for retailers be the same time as for the customers, who obviously have less than an hour to return to their workplace?

As I planned to withdraw 3,000 yuan (US$394), I happily queued at the ATM behind a guy whom I later believed came from another city.

I walked off after waiting more than 15 minutes and made a suggestion to the floor manager. You see, this chap seemed to have an unlimited number of ATM cards and the beauty of it was that he probably did not realize he could withdraw a maximum of 2,500 yuan at one go. He kept punching in 500 yuan per withdrawal.

I then made my pilgrimage to Sichuan Road. Amazingly, the Industrial and Commercial Bank of China there was closed for lunch.

Finally, China Merchants Bank's main hall was less crowded and the service speedier.

It seems that Shanghai has a dire shortage of cashiers - tellers. I can think of only one solution.

Yup, up their starting wages and reward the good and faithful ones.

DaCare Staffing is a leader in delivering temporary staffing solutions as well as innovative workforce technology solutions in a variety of industries in China, providing pre-screened, qualified and trained personnel to our customers through our quality service.

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Deutsche Bank (Xetra: 514000 - news) will on Friday name its first country head for China, the latest senior hiring by the bank in recent weeks as it attempts to expand its Asian operations.

The bank (TBHS - news) has poached Betty Deng, Citigroup's deputy chairman in China, a Harvard-educated banker, regarded as having strong links to the country's state-controlled enterprises.

Ms Deng will report to Lee Zhang, the bank's China chairman and regional head of global banking and be charged with developing the Deutsche Bank franchise in the country.

The bank's footprint spans investment, retail and corporate banking, and private wealth and asset management.

It recently applied to incorporate its mainland operations, a move that will eventually allow it to offer banking products in local currency.

Ms Deng's capture comes amid a hiring spree by Deutsche Bank in which it has recruited eight senior investment bankers and equity market specialists in Asia after losing ground advising on mergers.

The value of announced takeovers in the region reached a record $187bn in the first three months of the year.

However, Deutsche Bank has fallen from fourth in 2004 to seventh this year in advising on Asia-Pacific (002790.KS - news) acquisitions, dropping behind UBS (Virt-X: UBSN.VX - news) and Morgan Stanley (NYSE: MS - news) in the rankings.

Last year, it was one of three international advisers to the record $21.9bn listing of Industrial and Commercial Bank of China, the mainland's largest lender.

Among the hirings are Gordon Paterson, one of the region's heaviest-hitting investment bankers, poached from Citigroup (NYSE: C - news) to be the bank's Asia head of mergers and acquisitions.

Another star recruit is Angus Barker, who was lured away from UBS to head the bank's financial sponsors unit.

Rival bankers say Deutsche Bank has managed to prise away staff only by guaranteeing some of the hirings multi-million dollar contracts and that the bank faced huge losses if it failed to win new business.

However, Mr Zhang said: "The build-up of senior banking talent is an investment to take our franchise to the next level."

Dragon Capital Corporation (TSX: AHD - News), a miner and producer of zinc, lead and silver in China, today announced the appointment of Graham Warren as Chief Financial Officer. Mr. Warren will replace Oliver Xing; the appointment is subject to approval of the Toronto Stock Exchange.

Graham Warren is a Certified Management Accountant and his previous experience includes various assignments as CFO for a number of public and private companies. He is especially familiar with business in China as a director (and former CFO) of Hanfeng Evergreen (TSX) and a founder of Changfeng Energy Limited.

"We believe we are significantly strengthening our management team with the addition of Mr. Warren," said Christopher Harrop, Chairman of Dragon Capital. "On behalf of the Board of Directors, I would also like to extend our gratitude to Mr. Xing for his contribution to Dragon Capital during its formative period as a Canadian public company."

About Dragon Capital (Arehada)

Through its 100% owned subsidiary Arehada Mining Corporation, Dragon Capital is engaged in the exploration, development, extraction and refining of zinc, lead and silver in Dongwuzhumuqinqi, located in Inner Mongolia, China. Arehada produces zinc and lead concentrates, which are then sold to smelters in China.

Arehada is currently constructing its own zinc plant with a designed processing capacity of 100,000 tons per annum. The first phase, with a rated capacity of 50,000 tons per annum, will produce zinc oxide and sulphuric acid.

For further information

Christopher Harrop, Chairman, Dragon Capital Corporation, Tel.: (416) 350-5133, Email: porrah@gmail.com
Martti Kangas, Investor Relations, The Equicom Group, Tel: (416) 815-0700 x 243, Email: mkangas@equicomgroup.com

HANG Seng Bank started business of its locally incorporated subsidiary yesterday in Shanghai. The subsidiary, Hang Seng Bank (China) Ltd, will offer the bank a platform for unlimited yuan services in China's mainland.

The Hong Kong-based bank gained approval from the China Banking Regulatory Commission to establish the subsidiary on May 18.

China has been jointly tipped as the country or region where most private equity professionals expect an increase in private equity activity in 2007.

The jurisdiction ranked globally with Germany and Central/Eastern Europe as being likely to see the biggest increase, while rival Asian tiger India ranked fourth.

The survey of 350 private equity professionals, conducted by Simmons & Simmons, showed that private equity is looking toward developing markets for returns.

"Private equity continues to increase its activity outside the developed markets of the US and UK," Simmons & Simmons' China corporate head Damon Le Maitre-George said.

"To achieve the best returns, certain private equity companies are having to broaden their horizons and look toward emerging markets like Asia, where investment opportunities for undervalued companies are strong," Le Maitre-George said.

The survey found that 75% of private equity professionals think hedge funds will be a more important source of capital than last year. Large firms say collateralised debt obligation funds will be almost equally important in supplying capital.

Fifty per cent of respondents said they will increase their activity in alternative energy investments, while large firms will increase their activity in the infrastructure sector.

Private equity firms also had their say on how they choose their legal service providers. They rated client service, personal relationships and track record most highly when choosing a legal advisor, with large private equity firms also regarding geographical coverage as a very important factor in choosing a law firm. Only 5% of respondents believed price is vitally important when selecting a legal advisor. ALB

CHINA Citic Bank Corp may raise as much as US$5.7 billion in a simultaneous Hong Kong and Shanghai initial public offering, the world's largest stock sale so far this year, three sources said.

The Beijing-based bank plans to offer 2.3 billion new shares in Shanghai at 4.66 yuan to 6.1 yuan to raise up to 14.03 billion yuan (US$1.82 billion), the people said. The company may raise a further HK$30.17 billion (US$3.86 billion) selling 4.89 billion shares in Hong Kong at HK$4.72 to HK$6.17, they said.

Mainland banks and insurers have sold US$61.1 billion of shares in Hong Kong and Shanghai since June 2005, when Bank of Communications Co became the first domestic bank to go public in Hong Kong. They have been encouraged by high valuations as investors seek to benefit from China's rapid economic growth, said Bloomberg News.

"This is not a bargain price" for stock in China's eighth-largest bank by assets, said Wu Xuan, a Shenzhen-based analyst at Penghua Fund Management Co. It "leaves little room for future upside gains if it's priced at the top end."

At the upper end, Citic Bank's sale could be the world's largest stock sale so far this year, according to data compiled by Bloomberg. It could trump a US$5.5 billion closed-end fund launch in the United States and a secondary share sale by Ping An Insurance (Group) Co, China's No. 2 insurer, which raised slightly more than US$5 billion in February.

The price ranges value Citic Bank at 2.48 times to 2.81 times its estimated book value this year, according to the three people, who declined to be identified before an official statement. The price ranges have yet to be approved by the China Securities Regulatory Commission.

The new shares to be listed in Shanghai represent a six percent stake in the bank, while those in Hong Kong are equivalent to 12.8 percent. The stock may start trading on April 27, Citic Bank said.

China International Capital Corp, Citigroup Inc, Citic Securities Co, HSBC Holdings Plc and Lehman Brothers Holdings Inc are arranging the sale.

China has the most expensive bank stocks in Asia's emerging markets, trading at about 3.2 times estimated book value in 2007, compared with 1.7 times for peers in India and 1.4 times for Korea, according to a Morgan Stanley report.

The Industrial & Commercial Bank of China Ltd, the nation's largest, traded at 2.79 times the consensus book value estimate for 2007 in Hong Kong, higher than 1.7 times for HSBC and 1.94 times for Citigroup.

Citic Bank was China's seventh-largest by total assets at the end of 2005, according to a preliminary share sale document. The company fell to eighth last month after the Postal Savings Bank of China was established.

Profit this year was expected to gain 53 percent to 5.69 billion yuan, according to an April 4 statement.

The company may achieve loan growth of 20 to 21 percent this year and in 2008, according to Bear Stearns Asia Ltd analysts.

HONG KONG, March 26 (Reuters) - Citigroup Inc. (C.N: Quote, Profile, Research), the world's top bank by market value, on Monday named Eugene Qian as a managing director in its China investment banking team, hiring him from rival Deutsche Bank (DBKGn.DE: Quote, Profile, Research).

Qian, who will report to Jing Zhao, Citigroup's head of China investment banking, had been at Deutsche for four years, where he ran the bank's Asian natural resources investment banking team.

Several senior bankers have switched jobs in Asia recently, as dealmakers traditionally switch firms after getting their bonuses early in the year.

ChinaForum

With the right credentials, the opportunities for chief financial officer candidates are wide open in China. But those credentials are very different than expectations in the United States or Western Europe. Success is linked to the ability to set up processes and systems, as well as the ability to thrive in the local environment.

Demand, supply

When foreign companies move their manufacturing operations to China from nearby Asian countries, moving regional headquarters follows. Then the banks come along. This migration has created a huge demand for qualified financial professionals and a special demand for a unique type of CFO.

Thomas Zhou, an executive recruiter with DaCare Executive Search in Shanghai, told ChinaForum, “On the corporate side, the hiring activities are quite busy because all companies need a CFO or controller. Financial management helps them grow the business. We do quite a lot at the controller and CFO positions.”

Other recruiters see the same. In a recent article “Hiring Days are Here Again,” consulting firm Wang & Li says, "The greatest need area that we are getting is for candidates with strong financial management backgrounds who are able to take on CFO and Controller positions.... In addition to being familiar with both international and China GAAP, such a person must also have very strong experience in setting up financial systems and processes."

To underscore the importance of systems knowledge and process, a study last year by PriceWaterhouse Coopers and CFO Magazine said that one reason CFOs in China find financial reporting a struggle is incompatible IT systems and poorly trained staff. Ting Liu of PWC’s advisory group in Beijing was quoted as saying, “The key reason that the finance function in China is not up to world class standards is mainly due to a shortage of qualified professionals as well as the advanced techniques coupled with state of the art IT systems.”

At smaller companies, Wang & Li, which specializes in placing international caliber bilingual professionals, points to a disconnect between the international environment expected by many CFO candidates and the localized environment of the businesses that need them. "Typically, the direction and intent of both the board and executive management team is there, but the day-to-day operating realities are quite a different story. Therefore, it requires a person who really understands how to get results and bring about fundamental change in a highly local Chinese company environment."

Some companies take the route of not hiring a CFO at all. Lehman Brown, for example, provides outsourced CFO services for companies that have good finance teams in place but which lack the resources to hire a full time CFO, or which have only sporadic oversight requirements.

Credentials

Most CFO candidates Zhou sees have their CPA credential, which they typically earn in China. Although an MBA is not always necessary, many have earned graduate degrees and certifications overseas in the U.S. or U.K. Some candidates are trained by their companies or they are promoted to the Asia-Pacific level (Hong Kong, Singapore, Kuala Lumpur) and are trained there, he says. Other recruiters say companies like to see candidates with both an MBA and CPA, although finding such a candidate is rare in China’s tight job market.

Special skills

At a multinational company operating in China, bi-lingual fluency is not only an advantage but a necessity. “The person has to be able to speak English and Mandarin very well,” Zhou says, and be able to read and write both languages. “English is a must because he will have to report to headquarters in Europe or the U.S.”

Fluency in changing accounting regulations and market knowledge is also important. Not only must candidates be very familiar with the U.S. GAAP and China GAAP, but they should understand the China market and the U.S. market.

Soft skills are also important, Zhou told ChinaForum. “They should be able to manage a team. And personality is always very important. You have to be able to communicate very well.”

David Yeoung, a partner in the CFO and professional services practice of Hendricks & Struggles in Beijing, says that IPO experience is also helpful, given the number of overseas IPOs, although it’s not absolutely necessary as most investors know that IPOs are driven by teams. It is more important for the CFO candidate to have run the full financial function.

Ambition, a recruiting firm with offices throughout Southeast Asia, reports a trend toward “exact fit” hiring of CFOs, leading to a more rigorous selection process, which can take six months. With CFOs in China now highly visible after recent accounting scandals, and with responsibility far beyond accounting, the risks of hiring the wrong candidate must be avoided. One of those risks is simply not fitting into the corporate culture, which is why “internal candidates” are often perceived to be the right choice for regional CFO positions.

Meanwhile, Ambition is also observing in China new “governance roles,” which support the CFO in compliance and financial reporting matters. New roles are leading to job creation and increased opportunities for senior level financial professionals beyond the CFO title, often at high rates of compensation. Ambition describes this as a new governance support profession.

Hiring

Zhou’s search group is typically used by foreign companies doing business in China, generally the Fortune 2000, and including such companies as Intel, Microsoft and EBay. When a company seeks a high level executive or CFO, his firm is able to attract candidates by presenting the company well and offering an attractive package, which can mean more than straight compensation. In China, he notes, the job title is important. “More and more candidates like to see their career progress while they are working in the company.” Rather than the title China CFO, many would like to see the title CFO- Asia-Pacific, according to Zhou.

And whereas China has a reputation for being a low-cost labor pool, hiring at the CFO level is an area where scrimping doesn’t work. One mistake that corporate executives typically make is thinking that they will be able to hire financial talent cheaper in China.

In a June interview with the Dallas Morning News, Martin Tang, Spencer Stewart’s chairman for Asia, said that some companies think they can hire a CFO in China for as little as $40,000, but learn it may cost five times that, or more. Not only that, but wise companies over-hire to sandbag against employee dropout.

Tang described five talent pools from which executives are chosen: (1) Western expatriates, (2) Asian expatriates, (3) Chinese natives who return after earning graduate degrees abroad, and (4) Chinese locals who have remained in China. Of these, the most valuable are the Chinese who return from abroad, according to Tang. That’s because they have education, knowledge of both cultures and the advantage of being Chinese themselves.

When multinationals can’t find these returnees, Hendrick & Struggles’ Yeung says they should consider foreign CFOs who have worked in China “for a meaningful period of time” rather than hiring expatriates. Ambition reports that it is “extremely rare for a full expatriate package to be offered to a CFO hired locally.”

In Zhou’s experience, half the candidates are coming from the Mainland, half are expatriates. Local candidates “can have a good degree, be well trained in the Big 4, also have some industry experience and work long enough in the local markets for a multinational company. Even if they don’t have overseas background, they can get small or medium size CFO positions.”

In terms of pay, the CFO title in China doesn’t guarantee a large salary, except in certain industries that require specialist knowledge. Increasingly, CFOs are expected to demonstrate a record of success. Ambition reports that corporate governance concerns have led to a general scrutiny of CFO pay packages, with compensation trending toward performance based incentives.

Retention

Churn at the CFO level remains relatively low. According to Zhou, “Turnover rate at the CFO level is not that high. I won’t say that’s a problem in China. I would say that’s a stable position.” The Ambition recruiters concur, especially for non-Chinese speaking CFOs who may be reluctant to move on because they see the “dwindling demand for non-Chinese speakers.

By Zhang Fengming (Shanghai Daily)
Updated: 2007-02-05 14:27

With overseas lenders given a more level playing field to compete on the Chinese mainland, the competition has heated up to find experienced employees.
Star Ge, a headhunter for bankers, says the beginning of the year is the peak season for job seekers.

Big plans

Sales managers, public relations officers, translators and other positions are open for those interested in working for an overseas bank.

HSBC will add 1,000 employees this year after hiring the same number in 2006 as the bank expands investment in networks and personnel on the mainland, said Richard Yorke, chief executive officer of HSBC in China.

Hang Seng Bank also said it will hire about 2,000 people by 2010.

Some of the new employees are from domestic lenders.

"The competition among overseas and domestic lenders is not only about the fight for high-end clients but for talented staff as well," said Shiu Kai-Wing at Capgemini, a consultancy firm.

The expansion ambition of overseas banks is easy to see in Shanghai.

Places like Xujiahui and the Jing'an Temple area stand out as key locations for overseas banks.

On the crossroad of Caoxi Road N. and Nandan Road, a batch of overseas banks including Standard Chartered, Hang Seng Bank, First Sino Bank and Bank of East Asia, fight for attention.

In January, Standard Chartered opened its biggest outlet in eastern China for priority banking, or high-end client investment services, near Xujiahui.

High on the list of skills required to work at an overseas bank is foreign languages, Ge said.

English helps

Chinese in their early 30s happily greeted Katherine Tsang, chief executive officer of Standard Chartered Bank China, and introduced themselves with their English names at the opening of the Xujiahui branch.

"People from domestic banks who have ample branch expansion experience are also highly desired by overseas lenders," said Ge.

The demand for people with small- and medium-sized business experience also looks good on resumes.

"Most candidates see an opportunity to develop their careers as the main attraction of working at overseas banks," said Ge.

It is expected that employees working for overseas banks will top 16,910 by 2008, according to PricewaterhouseCoopers.

Nonetheless, there are also some unwritten rules in the industry. Overseas banks are reluctant to grab too much talent from domestic partners to avoid potential conflicts.

HSBC, Citigroup and Standard Chartered have purchased strategic stakes in domestic lenders as part of a two-pronged approach to expansion on the Chinese mainland that complements organic growth plans. The last thing they want to do is cause problems with a domestic partner.

However, domestic banks are not defenseless in the battle to hire talented people. Some offer an allowance to purchase real estate. The amount varies on length of service and position, but it can be worth tens of thousands of yuan.

All about timing

Xiao Yang, a Bank of China employee in Shanghai, declined the chance to work at an overseas bank.

As a graduate from Shanghai International Studies University renowned for its foreign language education, he said the chance to speak English is rare in his current position.

"I want to gain more experience before making a wise move," he said. "If the right timing comes, I will move."

By Cathy Chan and Patricia Cheng

Feb. 5 (Bloomberg) -- Merrill Lynch & Co. hired Margaret Ren as a chairman of China investment banking after U.S. regulators cleared the former Citigroup Inc. executive of wrongdoing in a 2003 initial public offering.

The 48-year-old daughter-in-law of former Chinese Premier Zhao Ziyang will report to China region Chairman Liu Erh-fei and Asia banking head Sheldon Trainor, said Damian Chunilal, who leads Merrill's Asia Pacific investment banking operations.

Ren may help Merrill challenge UBS AG and Goldman Sachs Group Inc., who together accounted for a quarter of the value of stock sold overseas by Chinese companies last year. Merrill slipped to sixth place last year from fourth in 2005 in arranging such sales, according to data compiled by Bloomberg. It ranked fourth in IPOs, up from sixth in 2005.

``She's well-connected,'' said Stephen De Pretre, a vice president at headhunter Salzer Consulting in Hong Kong. ``For companies that need to do deals in an environment that's very strongly regulated, having people with strong networks at senior levels is crucial.''

Ren confirmed the appointment, which is effective this week, when reached by phone. She declined to comment further. The mother of two has a master's degree in management from the Massachusetts Institute of Technology in Cambridge, Massachusetts.

Ren, who joined Citigroup in 2001 after nine years at Bear, Stearns & Co., was suspended in 2004 after the U.S. Securities and Exchange Commission started probing the firm's handling of China Life Insurance Co.'s $3.5 billion initial share sale, the world's biggest in 2003. She was cleared of wrongdoing last year.

Bulking Up

Hong Kong's Securities and Futures Commission on Feb. 2 granted Ren licenses to perform investment banking services. The license approvals on SFC's Web site list Merrill Lynch as her employer.

``This important hire reflects our commitment to this business,'' said Chunilal in an internal memo sent today.

Investment banks and buyout firms are bulking up as companies in China, the world's fastest-growing major economy, prepare to sell more stock and buy local and overseas competitors. The value of China's domestic stock markets has more than tripled in the past year, topping $1 trillion.

Chinese initial public offerings soared after the government ended a ban on share sales in May. The $75.4 billion of stock sold in China and Hong Kong trailed only that of the U.S. in 2006.

Blackstone Group LP, manager of the world's biggest buyout fund, last month hired Antony Leung, Hong Kong's former financial secretary, to run its business in China, Hong Kong and Taiwan. Oaktree Capital Management LLC, a Los Angeles buyout firm with more than $33 billion of assets, hired former JPMorgan Chase & Co. Asia Pacific Chairman Ralph Parks same month.

Citigroup's Woes

Wilson Feng, a vice chairman of China investment banking, was promoted to a chairman, according to the memo.

Citigroup's fortunes in China waned after it ousted Ren. Her successor as head of China investment banking lasted 15 months. After Ren left in June 2004, 10 of Citigroup's 13-person investment banking group dedicated to China quit the New York- based company.

The company, whose roots in China go back to 1902, slumped to 11th in overseas stock sales by Chinese companies last year from fourth in 2003, Bloomberg data shows. The only Chinese IPO Citigroup handled last year was China Coal Energy Co.'s $1.9 billion sale in December.

Citigroup is fighting back. Last month, it hired Zhang Wendong, former co-head of China investment banking at UBS AG, to be managing director for China investment banking. In March, it tapped Zhao Jing, former co-head of China investment banking at Morgan Stanley.

`Stronger Than Ever'

``2006 was a year of investment for us and we ended up with a great deal of momentum as the year ended,'' Bob Morse, the New York-based firm's chief executive officer of corporate and investment banking in Asia, said in a Jan. 26 interview. ``We have a pipeline that is stronger than it has ever been.''

Chinese companies may raise as much as $55 billion in IPOs this year, with domestic share sales overtaking Hong Kong offerings in value, according to JPMorgan Chase & Co.

Shares of Industrial Bank Co. soared 39 percent in their Shanghai debut today after the $2 billion initial public offer attracted record bids. Investors ordered $150 billion worth of stock -- equal to the market value of International Business Corp.

This year, bankers will be courting companies such as Agricultural Bank of China, which last week said it will seek a government bailout to prepare it for an IPO. The bank had 18 percent of outlets in the nation as of last month, and it employs 452,000 people.