Global banks may look to shift some of their staff from Hong Kong to Shanghai if China fulfils its commitment to giving them more control over their mainland operations.
But how much of a pay cut would you take if you moved to Shanghai?
To find out, we averaged out the maximum VP-level base pay figures from three recruiter salary surveys across 10 key financial services job sectors in both cities.
For ease of reference, we then converted the Shanghai results into Hong Kong dollars to produce the table below.
If you work in front-office investment banking (M&A, ECM, DCM) in Hong Kong you are now only outearning your Shanghai counterparts by 16% at VP level. In global markets (trading) you receive a mere 10% more.
“The previously big gulf between the salaries of bankers and traders in Hong Kong and Shanghai has fallen dramatically over the past five years,” says a Hong Kong-based headhunter. “Chinese financial liberalisation and the growth of local capital markets and local investment banks are among the factors pushing up base pay in Shanghai.”
But despite the narrowing pay gap, many Hong Kong bankers would be put off relocating to Shanghai because of China’s higher income tax rates, says former UBS banker Benjamin Quinlan, now CEO of Hong Kong finance consultancy Quinlan & Associates. Banks typically only give tax equalisation packages to senior managers.
Hong Kong still enjoys a commanding earnings advantage in many job sectors, though.
Most notable, private bankers are paid 151% more in Hong Kong than in Shanghai. China’s wealth management industry is in its infancy and many rich mainlanders choose to park their assets in Kong Hong, which offers better access to sophisticated products and services.
Private equity is the outlier in our table – average base salaries for VPs are 13% lower in Hong Kong than in Shanghai as the sector continues to expand in China. Total subscription in China’s private equity industry has risen to more than RMB 12tn (US$1.8tn) this year.
Image credit: Philartphace, Getty