Mainland financial services firms chase opportunities in HK
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Cash-rich mainland financial services companies are scouting for opportunities to expand their operations and market shares in Hong Kong as their overseas peers like Samsung Securities are scrambling to downscale operations.
Yim Fung, chief executive officer of Guotai Junan International, told China Daily that its Hong Kong-listed subsidiary Guotai Junan Securities Co Ltd — one the largest mainland-based securities houses, does not have any plans to axe staff, but instead is preparing for future expansion as well as considering hiring more staff.
“We plan to take the opportunity to enhance our investment banking business, develop institutional clients and initiate more products, particularly bonds and derivatives,” said Fung.
CCB International, the investment-banking arm of China Construction Bank has a similar plan. Zhang Xueqing, deputy chief executive officer of CCBI, said the bank will not lay off any employees despite the gloomy economic outlook.
“We might also consider hiring some highly-qualified personnel, although the number wouldn’t be (so) big,” Zhang told China Daily on Friday.
The cautious expansion plan of mainland investment banks and brokerages in Hong Kong is in sharp contrast with several international financial institutions in the city, which are either busy with layoffs or downscaling their business.
Local reports said around 100 staff from investment banking and technology support of Europe’s largest bank HSBC Holdings Plc will be fired in the second round of layoffs starting on Feb 9.
Since November last year, HSBC has started to eliminate hundreds of jobs at its investment bank as part of its plan to control costs. The bank in August announced that it will cut 30,000 jobs worldwide in the next few years, including 3,000 in Hong Kong.
South Korea’s largest brokerage by market value Samsung Securities Co on Feb 1 shut its equity sales and research operations in Hong Kong. Samsung said in a statement that it will more than halve staff numbers in the city as the company focuses its global operations on the sale of Korean shares.
Daiwa Securities Group Inc, Japan’s second-largest brokerage firm by revenue, reported losses for the fourth consecutive quarter.
Daiwa said it will lay off staff mainly in Europe and Asia. It will eliminate an additional 200 jobs on top of the 300 positions that were previously announced.
Mo Pak-hung, associate professor of Economics from Hong Kong Baptist University, said these international investment banks, which were opportunists seeking money-making opportunities particularly in developing economies, find that there are less loopholes for them to exploit due to continually improved financial systems. Hence the layoff is not a surprise under the current economy after the fast expansion in the past few years.
While riding on the booming economy as well as taking advantages of new opportunities including the yuan’s internationalization, Mo said Chinese financial institutions are still in the growing stage. A continued expansion is still well expected in the future.
Tapping on the global market, a great number of mainland banks and brokerages have set up their branches in Hong Kong, including ICBC International Holdings Ltd and BOC International Holdings Ltd.
Mainland banks, parents of their Hong Kong-based subsidiaries, were good performers. Profit of ICBC stood at 166 billion yuan in 2010, making it the most profitable bank in the world. Net profit of CCB and BOC were recorded at 135 billion yuan and 110 billion yuan in 2010, respectively.
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