Are Chinese bankers heading home for jobs?

The answer is no, not in droves. And that's partly because banks in China aren't ready to pay market prices.

In the months after Lehman Brothers collapsed, Chinese financial institutions conducted a series of high-profile recruitment drives in New York and London. The aim was to attract Chinese professionals working overseas back to the relative tranquillity of home. The problem is that the local institutions taking part were looking to sign up new employees on the cheap.

This strategy of bargain hunting stands in contrast to the hiring activity last year of Japanese banks like Nomura and Daiwa, which were willing to pay market prices when they went looking to boost their headcount.

"In some cases, the domestic firms were marginally successful at getting people. But ambitious candidates still generally want to work for an international firm in China because the local companies haven't been able to pay as much as their foreign rivals," said Alistair Ramsbottom, a Shanghai-based headhunter at the Blacklock Group.

Ramsbottom said that total compensation at a local firm is typically between 20% and 30% lower than what it would be at an international bank. One banker, working in risk management at a top-tier international bank, said that his compensation would halve if he did the same job at a home-grown company.

The result is that many Chinese bankers flew to Shanghai and Beijing early last year after losing their jobs in the US and Europe, only to be disappointed by the pay on offer. And many bankers with highly technical specialisations found only limited demand for their skills in what is still a relatively unsophisticated market. So, when the industry recovered sooner than expected, many were quick to leave China.

This is not to say that are no instances of high-profile returnees. For example, in February Zhu Changhong left a senior role at US investor Pimco to become chief investment officer at the reserves management department of the State Administration of Foreign Exchange (Safe), the organisation that looks after China's mountainous stack of foreign cash.

"I am inspired by his move," said Yuan Shen, who most recently was a managing director of fixed income at Babson Capital in New England. "We all know that people join Safe not for the pay, but by helping Safe manage its $2 trillion of foreign exchange, it will in turn help many people in China."

So although Chinese financial institutions failed to turn the hiring opportunities presented by the crisis into a great leap forward in talent, this will not affect the more significant long-term trend: bankers going home to take part in the China story. They didn't come home all at the same time, but rest assured, a steady stream of bankers will go back to the old country to participate in the growth of a new superpower.

This story was first published as part of the cover feature in the February issue of FinanceAsia magazine.

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