China's longer-term internationalisation and full convertibility of its currency have spurred the money market in Hong Kong so much that deposits in Chinese renminbi have grown exponentially over the few past years. As a result, the city's banking industry is bullish on the growing business opportunities from renminbi deals, which is good news for job-seekers with international trade as well as mainland banking and finance experience.
At end-2009, RMB bank deposits stood at just over 60 billion yuan (about HK$73 billion). By end-July, these deposits had exceeded 570 billion yuan, according to Hong Kong Monetary Authority (HKMA) figures. Yuan deposits now account for 10 per cent of the city's total deposits.
The speedy growth of yuan deposits and the fact that Hong Kong's stock market is an important fund-raising channel for mainland companies have uniquely positioned the city as a testing ground for China's financial liberalisation. This includes promoting the greater use of renminbi for cross-border transactions.
Not too long ago, the renminbi business scheme covered mainly banking services for personal customers, such as deposit-taking, currency exchange, remittances and debit and credit card services. Today, companies around the world are entitled to hold renminbi accounts, while local banks are allowed to create renminbi-denominated investment products and provide conversion services.
"A couple of years back, we saw Chinese companies coming to Hong Kong asking for more trade finance as an extension to their business here. But nowadays, we see more corporates using their subsidiaries in Hong Kong as a financing platform for the whole group. It shows a shift in operations and reflects the liquidity situation on mainland China. All in all, it means there are more opportunities for banks in Hong Kong," said Frank Fang, director of Greater China corporates, commercial banking, at HSBC. He was speaking at the Hong Kong Institute of Bankers (HKIB) third Annual Banking Conference on September 27.
Around 130 authorised institutions in Hong Kong are currently engaged in renminbi business. As China's economic reform progresses and diversifies, the renminbi dimension will be an important area of future development for the institutions who also need to meet the demands of providing broader service with a better human resources (HR) strategy.
"The requirements for people have changed over the past years," Frank Jin, assistant general manager of Shanghai Commercial Bank, told the conference.
"In the beginning, you needed people who were capable of setting up business in China. Nowadays, you need all-rounders with marketing and management skills, as well as knowledge on regulations and policies. It has become more challenging, as it is about more than just setting up an operation," Jin added.
Hiring the correct people and retaining them are the most challenging aspects for local banks operating on the mainland. Hence, human capital has emerged as a key factor in the success of these banks.
According to Fang, HSBC has increased the level of interactions and exchanges of talents across the border. "By increasing the number of people going to the other territory, be it for short term or a longer term from two to three years, it has helped them pick up knowledge and experience," Fang added.
However, with the market expanding so rapidly, banks are facing more challenges in training and retaining their staff. "Training takes time, but business [outpaces it]," said Fang, adding that recruitment and training were always ongoing, so HSBC would adopt its old principle and provide continuing training and in-house staff development programmes.
The economic downturn in the United States and Europe, as well as Beijing's cooling measures, will help slow the rapid expansion of the entire market, said Donald Lam, head of corporate and commercial banking at Hang Seng Bank.
"That will help consolidate the demand on human resources," he added. "In the long run, we are looking at having a single platform for recruitment in the Greater China region."
Lam said he was positive that salary levels on the mainland and in Hong Kong would also converge in the future. "Some managers in Shanghai are earning more than those in Hong Kong - and I believe the salary levels will be equalised to a certain extent. With the double-digit inflation rate on the mainland, especially wage inflation, I believe a point of convergence is approaching."
Lam, Jin and Fang convened at a panel discussion on the business strategies, human resources and operations of China businesses at the HKIB banking conference. The event drew more than 400 delegates from the industry.
The HKIB has more than 100 corporate members, representing 70,000 banking and finance professionals.