Investment Banking In China | Top Banks List | Salary | Jobs

Investment banking in China has surpassed all levels, and it has become one of the best markets in the world. If we compare other markets with China, we will see that both in volumes and fees, China has taken a dominant position.

It is quite different from other parts of the world. If someone you wants to make their mark in Chinese investment banks, all they need to do are two things – first, make sure that they want to go into the Chinese market, and second, they are attending a top-tier university/college. If these things work out well, they can go for a couple of great internships, and everything will ultimately fall in place.

China has made its mark in the debt capital market (DCM), equity capital market (ECM), and also in M&A (Mergers & Acquisitions). During 2016 (the whole year), China accounted for 85.7% of DCM, 82.1% of ECM, and 52% of M&A in Asia in fees. If we club all the markets, China has taken over 76.6% of the investment banking in Asia in terms of fees.

The best part is China wasn’t an all-in-one dominant country in Investment Banking. It has grown over the years, especially since 2010. And since 2010, it has grown steadily. In the capital market, China accounted for 50.2% in Asia in fees. China was always strong in the debt capital market, but not as good as it achieved in 2016. In M&A, China took over just 35% of the total Asia market in 2020 in fees.

However, there is a twist in the tale. In 2016, even though China accounted for 85.7% in DCM in terms of fees in Asia, in volume, China only accounted for 74.9% in Asia. Though in the case of M&A, the story is reversed. China took over 65.3% in volume in 2016 in the Asian market, which was 13.3%  more than its standing in terms of fees. In ECM, things got closer – around 81.3% in volume and 82.1% in fees.

This data is curated by considering all dominant Asian countries except Japan. Let’s look at the data for DCM, ECM, and M & M&A.

source: euromoney.com

source: euromoney.com

Source: euromoney.com

As mentioned in the overview, you realized that China is the most dominant country in terms of investment banking volume and fees in 2016. And that means investment banking in China offers similar kinds of services.

• Debt Capital Market (DCM): Investment banks in China help their clients organize borrowing and assist in accessing a large pool of investors worldwide who are looking for various opportunities. DCM is usually cheaper than ECM, and debt adds a tinge of diversity in financing.
• Equity Capital Market (ECM): The equity capital market is quite popular among investors because they can finance more funding whenever required by issuing new stocks. Chinese investment banks help their clients issue more stocks. These Chinese investment banks also help in an initial public offering (IPO) and assist in underwriting offerings.
• Mergers & Acquisitions (M & M&A) Advisory: Investment banks in China offer advisory in mergers and acquisitions and divestitures. M&A advisory helps clients find suitable opportunities and create a synergy that can ultimately help create the clients' results. And a major portion of their resources is used in M&A deals.

These are the top services Chinese investment banks offer. But there are a few noteworthy things. These investment banks have these three main features –

• Huge investors' relationships and networks: Investment banking in China is based on one simple thing – relationships. Having a cordial relationship with all the investors and clients is key to the smooth running of workflow. Great relationships help these investment banks find the right investor for the right project. They can offer strategic insights, great business contacts, and significant value creation expertise.
• Flawless & creative execution: Planning is of great importance, but if the execution is not proper and not done on time, most planning loses its value. Chinese investment banks boast of their incredible work ethic and flawless & creative execution.
• Customized deal structuring: Chinese investment banks help clients with customized deals to get the maximum value out of the deals, and the transaction can be a win-win for both parties.
• Cross boarder activities: The investment banking industry in the Chinese market promote cross boarder transactions, which include joint venture, merger, acquisition, or strategic investing. They help the Chinese companies evaluate the capital market conditions at international level, expand beyond the boarder and also participate in global investments.
• Regulation – The investment banking sector is overseen by the China Securities Regulatory Commission(CSRC) and People’s Bank Of China (PBOC). They enforce the rules related to market conduct, risk management, capital requirements, etc.
• Innovation – The level of fintech and innovation that took place in the Chinese market has made considerable contribution. The rapid technological advancement in mobile and online banking, artificial intelligence, blockchain, etc have made the investment banking field very lucrative, advanced and strong.

However, the entire operation is within the country’s regulations and may change as per the change in jurisdiction. Thus, it is important to understand the Chinese culture, market, rules and regulations to operate over there.

Leader League published the list of Top Investment Banks in China in Large Caps and Cross Border Deals. Here is the top banks’ list below –

source: Leaders League

Leaders League also published their recommendations for Investment Banking in China on Small & Medium Cap Investment Banks in 2021. They have divided these top Chinese investment banks into three rungs – "leading," "excellent," and "highly recommended."

source: Leaders League

Also, have a look at the list of Top Investment Banks Globally -

• Top Boutique Investment Banks
• Bulge Bracket Investment Banks
• Middle Market Investment Banks

The recruitment process in Investment banking in China is quite different. But there are a few similarities between the US and the UK. Let’s now look at the recruitment process of investment banking in China –

• Internships are the key ingredients: The whole world emphasizes this concept of the internship. But in China, things are different. If you don’t have an internship in China, you will not get a job. The equation is simple – if you haven’t done any internship, it shows that you don't have any interest in investment banking. And if you don't have any investment banking, why do investment banks in China take an interest in you? The second thing that’s most important in the case of internships is how many internships you should do. The experienced and recently hired investment bankers agree that only one internship will not do the trick. It would help if you had multiple internships, and all the internships should be relevant. For example, if you do internships in any top-notch investment bank or private equity funds, the experience is relevant. Private equity is much different than investment banking, but working in private equity is better than having no internships at all. The next burning question is for how long you should do internships! The answer is at least six months. If you do two-month internships, that won’t add any value because banks won’t offer any valuable work to their interns until they work at least for a few months. In China, internships are often a great route to secure a full-time job; but that’s always not the case. And that brings us to the second point of discussion in the recruitment process. Also, read How to get an Investment Investment Banking Internship.
• Top-notch universities are everything: The main emphasis is on your background in China. It has nothing to do with who you’re if you have a brand name on your resume. For example, if you study in the US at a top-notch university, the banks will accept your application. So branded universities are everything. If you’re planning to work as an investment banker in China, your first emphasis is to study at a top-tier university in the world. It can be anywhere – the US, the UK, or Australia. Just make sure that you’re attending a university that comes in the top 20 lists in the world. But what will happen if you don't have access to a top-tier university or can't afford the fees? Here’s what you should do.
• Network hard: If you’re not able to attend a top-tier university, your job is to network hard. Hard means you need to go to every door you can find and connect with everyone you can get to know. If that means standing in the bank's lobby to meet an analyst of the bank in person, do that. In a nutshell, if you don’t attend a top-tier university, it’s still possible to get a job in an investment bank in China; but it surely is an uphill battle.
• Interview process: The interview process in Chinese investment banks works like this. Usually, there are two rounds, and rarely there is an exception. The first round is a telephonic round where you will be seen as to whether you’re fit for the bank and the job or not. The associates take this telephonic round. In the second round, you need to appear before them, and you need to answer questions before two executive directors (ED) and one Vice President (VP). You may be asked any questions. So it would be best if you were ready. Questions like – "What's the meaning of life?" "Tell me a joke" can be asked. You can expect any technical question or a fit question. It would be best if you were ready for every question to get the green signal in the final round

Even if Investment Banking in China has surpassed all countries in investment banking in Asia, it’s not a great place to work. People don’t like to come from other locations to work in China. The main reason is here. Deals are executed not based on skills/approach/technical ability. It depends solely on your networking skills. If you don’t know anyone in China, it would not be easy to close multiple deals.

M&A deals are less in China, and ECM & DCM take prominence. That means you would be doing pretty little time working on complex models and technical aspects of M&A deals. That ultimately means your technical ability as an investment banker would never match your counterparts in London or New York. But you would be pretty good at building relationships and tapping into your network.

Working 100+ hours of work per week is commonplace for analysts. But clients understand the value of the weekend, and as a result, you get to have some downtime at the weekend where you can rejuvenate and prepare for the next grueling week. It would be best if you also traveled a lot and you should know how to socialize because there will be ample opportunities to do that.

Also, have a look at Investment Banking Culture Globally.

Some of the main reasons that Investment Banking in China is not very attractive for job-seekers is its low pay grade. When foreign Investment Banks built their offices in China, they started paying the local rate. As a result, the salaries become much lesser than those paid in New York or London. And that has become the norm.

But things are starting to shift drastically. Investment banks in China have realized that to retain more resources, it's important to pay hefty salaries to the best talents. Thus, J.P. Morgan, Morgan Stanley, UBS started to pay around the US $80,000 – $100,000 per annum. Even some boutique banks have also started to pay the same salaries.

However, local banks/securities are yet to pay a better salary. They pay around RMB 20,000 to 30,000 per annum which is US $40,000 to $60,000 per annum.

Compared to the basic, the bonus is not certain. In some years, you can get a huge bonus, and in other years, you can get almost none. And sometimes, the bonus is much more for juniors who have worked on the deals directly.

Let’s have a look at the figure for salaries paid by Chinese investment banks and global investment banks in China –

source: efinancialcareers.com

Unlike the US, the exit opportunities from Investment Banking in China are lesser. People don’t seem to leave investment banking after 2-3 years of working. But they can, and they usually do when they get an opportunity to shift their career profile.

There is one dominant exit option these bankers have, shifting to private equity. People don’t usually shift their careers to private equity after a few years because they are often promoted and allowed to hold a higher position in investment banks.

Also, read Investment Banking Exit Opportunities globally.

Guide to what is Investment Banking In China. We explain the services offered, list of top investment banks, recruitment process & culture.

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