Where banks are planning to double or triple headcount in 2014
The dust has settled on the announcement of the Shanghai Free Trade Zone, but the excitement is building about the new jobs being created by the financial institutions that have been licensed to operate there.
To date, eight foreign banks have been granted permission to open sub-branches in the SFTZ; HSBC, Citigroup, Singapore's DBS and UOB, ANZ from Australia, Deutsche Bank, Bank of East Asia, and Hang Seng Bank. A number of other applications are pending.
The new zone is a test case for China's government. Success could lead to greater liberalisation of the economy and barriers to foreign financial services groups being increasingly dismantled.
Karl Franzmann, associate director at Michael Page, says the impact of the SFTZ, which was only officially unveiled at the end of September, is already being felt on hiring in the region.
"This year we have seen some of our largest banking clients relocate top staff from Hong Kong to Shanghai. The growth plans of these banks are pretty impressive with headcount forecast to rise 2-3 times in 2014."
Monica Song, a manager at Hudson in Shanghai, says that the jobs that will most likely be in demand include project management specialists; trade finance specialists; compliance managers; cross-border RMB experts; risk managers; traders; asset liability managers, relationship managers and investment product managers.
Franzmann believes that the SFTZ represents a "spectacular" career opportunity for top bankers to make a difference.
"Senior bankers at major international firms are tax equalised and get generous cost of living allowances which means in theory they are no worse or better off."
What he is referring to is one of the disappointments of the zone. Many had hoped that it would have offered a tax-free, or at least a lower tax regime, but this has not been the case. Unlike Hong Kong, where the marginal tax rate is 16%, the mainland's top marginal income tax rate of 45% kicks in just over US$13,000 per month.
Franzmann says he is expecting "serious salary inflation" in the next one to two years for mid and senior management jobs as more firms compete for the best local and foreign talent, and recognise the need to increase base pay to match tax.
The authorities have made one concession on compensation: employees who get bonuses in the form of shares are given five years to pay the applicable tax. While the tax regime is otherwise unyielding, some analysts don't believe that it is necessarily carved in stone. Wei Yao from Societe Generale told Business Insider that, "like all previous economic experiments (in China), this project is going to be a work in progress, subject to constant refinement.”