Labour Market News
- Foreign banks compete for staff, raise wages
Date: 14-May-2007 Sources: (Shenzhen Daily)
MORE than two-thirds of foreign banks in China are grappling with annual staff turnover of more than 15 percent and 'significant salary inflation?as they step up expansion in the world's most populous nation, according to a PricewaterhouseCoopers LLP (PWC) survey.
Finding and retaining good personnel was ranked the second-most difficult aspect of the Chinese banking industry by the 40 foreign banks polled, behind regulation. Overseas banks expect to double their total workforce in China to almost 36,000 by 2010, the survey showed.
'It's not unusual to hear 50 to 100 percent or even greater than 100 percent in terms of salary inflation if that person is deemed key,'said Brian Metcalfe, an associate professor at Brock University in Ontario, Canada, who advised on the report. 'And there's a lot of headhunting going on between the foreign banks.'
China fully opened its banking industry in December, triggering a rush among banks including Citigroup Inc. and HSBC Holdings Plc to compete for the nation's US$2.2 trillion of household deposits. That expansion is becoming more costly as wages in China's cities rise by about 15 percent a year.
HSBC, Citigroup's Citibank Ltd., Bank of America Corp. and Bank of East Asia Ltd. were among participants. New-York based Citigroup plans to double its number of China outlets this year, to 30. HSBC will add 35 branches, bringing its total to 60.
'The biggest problem is probably middle management,'Michael Smith, HSBC's Asia chairman, said in September. 'The market is in short supply and with everyone growing the way they are, they are looking for the same people.''
Twenty-five banks will more than double their China staff by 2010, PWC said. Six plan to add more than 1,000 employees over the next three years, and three will hire 3,000 people. One-third of respondents expect their assets in China to surge to US$108 billion by 2010, from US$51 billion now, the survey showed.
By the end of last year, 74 foreign banks had set up branches in China and another 186 had established representative offices in the country with 1.3 billion people and a growing middle class, according to the China Banking Regulatory Commission. Yet foreign banks accounted for only 1.3 percent of total assets in China's banking industry.
Seventeen respondents forecast the number of banks operating in China will rise above 100, increasing competition, including for staff. Twenty-six expect 20 to 30 banks to locally incorporate their China operations, allowing them to take small yuan deposits from individuals and sell consumer products such as credit cards.
China has enjoyed four years of at least 10 percent economic growth, leading to a shortage of skilled workers and rising wage demands in many industries. Salaries in urban areas jumped 15.4 percent last year and have doubled since 2001, according to the statistics bureau.
'All the banks are experiencing significant turnover rates,'said Mervyn Jacob, head of PWC's financial services practice in Hong Kong and the mainland. 'There's a shortage of skilled staff, and as a result, there's significant salary inflation.'
One Asian bank lost a key wealth management employee after a competitor tripled his salary, Metcalfe said. A European bank reported that its China employees resigned immediately after returning from head office training, according to the survey.
Of the banks that participated, 35 percent recorded annual staff turnover rates between 15 and 20 percent. A small group of large international banks have been able to keep the rate below 5 percent, the report said. One reduced its China staff turnover rate to 50 percent last year from 80 percent two years ago.
Foreign banks have been boosting expatriate staff to help counter the shortage of local skilled talent. The 40 banks in the survey employ a combined 2,872 expatriates in China, up from 475 reported by 35 foreign banks in a 2005 PWC survey.
The respondents to the latest survey plan to add a combined 639 expatriate employees in China over the next three years, the report said.
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