At a time when the big banks in New York, London and Europe face closer scrutiny and political backlash against big bonuses for those in investment banking jobs, the action seems to be shifting eastward.
Total investment banking revenues from the Asia-Pacific region (excluding Japan) jumped 56% in 2010 to $12.2 billion, rising to nearly a quarter of the industry, according to data from Dealogic published in The Wall Street Journal.
The Journal cites fund-raising efforts by Chinese companies as helping to make Hong Kong’s stock exchange the busiest the world for the second straight year. The Agricultural Bank of China’s IPO, for instance, raised $22 billion last year in Shanghai and Hong Kong, a close second to the largest IPO, General Motor’s $23.1 billion in 2010.
Global investment banks are focusing their diminished bonus pool on their fastest-growing region, Asia, and the battle for top talent in the region is also heating up. A regional head of equity capital markets, which focuses on initial public offerings and public stock placements, can earn between $1 million to $3 million in cash and stock.
Bonuses will vary greatly from bank to bank. But lower industry revenues overall and small bonus pools are creating a distinct polarization between stars and also-rans, as opposed to spreading the bonus pool around. Senior bankers who aren’t top rainmakers are less likely to get big bonuses because they are less likely to jump ship in this environment.
“A banker working on two large IPOs or M&A transaction may get a higher bonus than a banker that works on 10 smaller IPOs or deals during the same year, whereas traders will have a small (or no) bonus in a bad year and very good bonuses in bumper years,” according to Marco Kaster, a mergers & acquisitions consultant for Asia Pacific at Towers Watson.
The real estate sector is hot in Asia, spawning a number of IPOs. Bankers predict more real estate-related deals this year. Hong Kong’s Cheung Kong Holdings, the property flagship of billionaire Li Ka-shing, is set to raise around US$3 billion in from a yuan-denominated IPO, which is a first outside of mainland China.
What’s your take? Are you seeing a shift in your firm toward more activity in the Far East? Add your comments below.