Aug 19, 2010

Chinese banks look within for branch managers

China’s Big Four banks have an average of about 20,000 branches each across the country. Agriculture Bank of China (ABC), for example, has more than 23,000 outlets covering nearly every rural district in the PRC. These networks create a large associated human capital cost...

Because the banks also have to maintain tens of thousands of branch managers. Promotion, hiring and retention are all on a grand scale. But luckily for local banks, they can often source from within for branch-level vacancies.

“Local banks value bottom-up promotion, and candidates for senior positions such as branch manager usually come from an internal talent pool; people who have usually stayed more than 10 years at the bank,” says Andy Wong, MD of Active X Search.

Foreign banks such as Citi, Standard Chartered, HSBC and ANZ are also expanding their branch networks. They are doing this from a much lower base, but at a rapid rate as they target not just Beijing and Shanghai, but also second and third-tier cities, and rural areas.

As comparative new entrants to the market and in contrast to their Chinese competitors, international firms often use external agencies to help them recruit branch managers.

“It is difficult for foreign banks to find good talent. They have a higher cost in hiring, not only from outsourcing, but also due to higher remuneration packages offered to attract talents,” comments Wong.

In addition, overseas banks must battle harder to retain staff. “Compared with foreign banks, local ones have a much stronger loyalty level and lower turnover rate. More than 60 per cent stay in the bank for years,” he adds.

The growing maturity and strength of local banks was graphically demonstrated recently by the listing of Agricultural Bank of China. However, on average, the reporting and analysis skills of branch managers in Chinese banks are still regarded as less competitive than those of their counterparts at foreign institutions.

Of course this doesn't mean local managers are landing fewer deals. Usually they do business through Guanxi, and their success is helping to fuel the localisation moves of foreign banks in China.