Wanted: Bankers fluent in Mandarin

Investment banks need experts in debt teams to service Chinese lenders amid capital crunch

BEIJING • Even as investment banks cut jobs across Asia, they are hiring staff to help China's lenders reinforce buffers against a financial crisis.

Difficulty in finding bankers with Chinese-language skills and relevant expertise is also forcing companies to "retool" existing employees with training, global headhunting outfit Sheffield Haworth said.

There has never been more at stake after Chinese lenders raised a record US$62.8 billion (S$89.2 billion) selling US-dollar bonds last year. Rating companies say the lenders will need to sell more debt with equity characteristics to replenish capital this year.

"Banks are keen to hire financial institution specialists within their debt teams as many anticipate a potential wave of hybrid capital issuance," said Mr William Bown, executive director for global banking at Sheffield Haworth.

"Historically, the specialists with knowledge of bank capital have been flown in from markets like Europe or Australia. But banks increasingly have to make do with less, and ideally they want a single banker with knowledge of the product who is fluent in Mandarin."

Rising bad loans, falling profitability and tighter Basel III financial regulations are straining bank capital.

Outstanding credit swelled to 264 per cent of gross domestic product last year, Bloomberg Intelligence estimates.

Moody's Investors Service and S&P Global Ratings said higher leverage is amplifying credit risk. Fitch Ratings said poorer loan quality and shadow banking curbs will increase fund-raising pressures.

"The credit story for Chinese banks is deteriorating, with more bad loans," said Mr Mark Young, head of Asia-Pacific financial institutions at Fitch.

"Regulatory requirements in China are evolving... there is increased recognition of risks in off-balance-sheet products such as wealth management products and the need to top up capital as a result."

Last year, 59 per cent of fees for underwriting dollar bonds in Asia ex-Japan came from financial issuers, the most since 2003, New York- based Freeman & Co estimates.

US currency debt offerings by banks in the region climbed last year to US$89.1 billion, 49 per cent of total bonds, Bloomberg-compiled data showed. The proportion was 61 per cent for China's lenders, the data indicated.

Sales of US-dollar debt for capital that complies with Basel III standards rose 8 per cent to US$12.7 billion in Asia ex-Japan, although there was a lull in such issuance from China after a binge in 2015.

Bigger banks will also have to start selling Total Loss-Absorbing Capacity debt, designed to make key lenders safer by ensuring they fund themselves with securities that can absorb losses in a crisis.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on January 26, 2017, with the headline 'Wanted: Bankers fluent in Mandarin'. Print Edition | Subscribe