ICBC Securities Unit to Hire From Global Competitors

(Corrects name in 12th paragraph of story originally published Feb. 14.)

ICBC International Holdings Ltd., the securities unit of the world’s largest lender, will hire more people from global rivals as it expands abroad to compete with the likes of Morgan Stanley and UBS AG for advisory work.

“We are increasingly internationalizing our workforce,” Mary MacLeod, who joined ICBC International last month as deputy chief executive officer from Deutsche Bank AG, said in a Feb. 11 interview. “As our client base and our presence continue to expand beyond China and globally, we need to ensure that our bankers have the experience to operate in a global framework.”

Hong Kong-based ICBC International plans to increase its 250-strong workforce “significantly” over the next two years as it moves beyond helping Chinese companies sell stock or find takeover targets, said MacLeod, without providing more detail. She was chief operating officer of Deutsche Bank’s investment- banking unit in the Asia-Pacific region before joining ICBC International.

Industrial & Commercial Bank of China Ltd., the parent of ICBC International that’s the world’s largest bank by market value, in April said it hired Deutsche Bank’s Lee Zhang as a vice president. The hiring of Zhang, one of the most senior Chinese investment bankers at a western securities firm, fueled speculation that Chinese financial companies were getting ready to hire executives from Wall Street firms such as Goldman Sachs Group Inc.

‘Big Headache’

ICBC International started operations in 2009, and participated in Petroleo Brasileiro SA’s $70 billion share sale, the world’s largest, as a joint bookrunner in September last year. It was the first time a Chinese investment bank took part in a global offering.

ICBC International also worked on the $20.5 billion initial public offering of insurer AIA Group Ltd. in Hong Kong in October, the biggest IPO in the city. That deal helped make the firm the 11th-largest underwriter of first-time stock sales in Hong Kong, its best-ever showing. New York-based Morgan Stanley ranked first, Bloomberg data show.

Companies raised a record HK$430 billion ($55 billion) in IPOs in Hong Kong last year, as economies and stock markets recovered from the global financial crisis. ICBC International helped arrange three more IPOs in the city, all by Chinese companies.

Trailing in Pay

Matching the pay offered by firms like New York-based Goldman Sachs and Frankfurt-based Deutsche Bank has been a major obstacle for Chinese securities companies trying to expand, executives and headhunters have said.

“Getting global talent has been a big headache for us,” China Merchants Securities (HK) Co. Managing Director Ronald Wan said in an interview in November. “It is quite challenging to convince our parent group in China to agree to offer competitive packages, especially when it comes to bonuses.”

While China boasts four of the world’s 10 largest banks by market value, pay remains a fraction of what executives in the U.S. and Europe get, limiting their allure as employers.

ICBC Chairman Jiang Jianqing was paid $911,000 yuan ($138,155) in 2009, compared with the 9.55 million euro ($12.9 million) package awarded to Deutsche Bank CEO Josef Ackermann the same year, according to annual reports of the two lenders.

“Chinese banks are less flexible with the compensation structure,” said Jessica Kao, a Shanghai-based vice president at compensation consulting firm McLagan. “Management mostly just follows the target set earlier. There is less room for negotiation.”

Keeping Talent

Chinese investment banks’ expansion plans may get a boost as western rivals review compensation after the public outcry over pay that followed the global financial crisis.

Barclays Plc reduced bonuses for employees of its investment banking unit by about 15 percent on average, people with knowledge of the matter said last week. Bonuses will account for a lower share of total compensation and a bigger part of the awards will be paid out in restricted stock, Yoon Chi-Won, UBS’s co-chief executive officer for Asia-Pacific, said today in a Bloomberg Television interview.

That poses a dilemma for securities firms’ trying to ensure their best performers don’t depart.

“Talent retention is a big topic for investment banks these days,” Yoon said.

To contact the reporter on this story: Stephanie Tong in Hong Kong at stong17@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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