Banks in China increase hiring

Investment banks in China are in recruitment mode as they seek to boost their presence in the mainland alongside existing operations in Hong Kong.

Harry O'Neill, managing director of the Whitney Group in Hong Kong, said: 'There has been a huge boom in banking recruitment (in Asia) over the past six months. Much of it has come from mainland China.'

Mike Brennan, global head of the financial markets division at Alexander Mann, said banks are in particular seeking to establish a sales presence on the ground in China: 'More and more banks are migrating to mainland China. It is a trend we expect to continue.'

As well as equities and derivatives sales, headhunters said hiring activity is focused on asset management, investment banking, and credit analysis. They said ABN Amro, Barclays Capital, Deutsche Bank, Merrill Lynch have been among the main hirers this year.

In the past few weeks Crédit Agricole has announced it is looking for a Chinese partner for its wealth management business and HSBC has been negotiating to buy a stake in Bank of Communications, China's fifth largest banking group

Last month JPMorgan said it is hiring an additional 10 analysts for mainland China this year and this month UBS hired George Li, son of Li Ruihuan, a former member of the Chinese politburo, to help build its presence in China.

Despite having limited investment banking experience, Li was hired as a managing director. Connections have traditionally been all- important in Chinese investment banking, where it helps to have links to the ruling elite.

However, the kudos of bankers with political relatives took a blow in June when Citigroup suspended Margaret Ren, a relative of Zhao Ziyang, a Chinese premier in the 1980s, for presenting false information to the bank and regulators.

Headhunters said the tide is slowly turning against appointments on the basis of connections alone. Brennan said banks are increasingly looking for Chinese nationals who have been educated abroad and gained banking experience there: 'There is massive demand for 'returnees' - Chinese people in their late 20s or early 30s with a Western education and experience of the Western banking environment.'

Brennan said pay for bankers working in the Chinese market can be generous: $1m guaranteed packages for derivatives specialists servicing the Chinese market from Hong are not unheard of. Pay in Shanghai is often half that in Hong Kong, but the cost of living is lower.

Banks' interest in penetrating the Chinese market comes despite concerns about the business environment. In 2003 Chinese GDP rose more than 9%, leading to concerns that its economy is overheating. Additional concerns have been raised following accusations of accounting irregularities at China Life Insurance, which did the country's biggest 2003 IPO, at $3.5bn.