US bank Citi has stated its intention to become a leading player in institutional investor sales in China after strengthening its presence on the ground in Shanghai with three new hires.
Rance Lan has returned to the fold as vice-president, responsible for the coverage of institutional clients in eastern and southern China and more generally for driving business growth.
Meanwhile, Wendy Wang Wenjun and Hou Yang have also joined as assistant vice-presidents, covering bond sales and local trading desks, respectively.
Shenghua Hu, Citi’s head of markets for China, says that the bank is enjoying at least a 50% year-on-year increase in flows from domestic institutional investors, both in renminbi and foreign currency bonds. “We expect this trend to continue,” he adds.
The outlook for institutional investor sales has improved for foreign banks with the introduction of a bond market-making licence in China – Citi is one of only three, along with Deutsche Bank and Standard Chartered – on the back of recent market liberalisations announced by Beijing, Hu points out.
“Nafmii [National Association of Financial Market Institutional Investors] is getting ready to launch credit derivatives and allowing foreign banks to underwrite short-term notes and medium-term notes,” he says. “So the liberalisation is gradual and we are responding to both past and future developments.”
Hu states that companies in China are increasingly supplementing bank loans by issuing bonds, with yields having risen by around 25 basis points.
“We expect rates to go up some more and then stablise,” he says. “With faster renminbi appreciation, ample liquidity and strong demand for duration from funds and insurance companies, the bond market should be well supported, except for short-term adjustments.”
Citi’s trio of new hires brings the number of people in its investor sales team in China to seven. This has grown from one just six months ago. In total, Citi has 400 investor sales staff in Asia. Its major markets at present are Australia, Hong Kong, India, Japan, Singapore and South Korea.
The bank has spoken of “ambitious growth plans” for its markets business in Asia, which is understood to employ between 40 and 50 staff in China within foreign exchange trading, corporate sales and structuring, and investor sales. It added a stock-broking presence in Indonesia in July and in Malaysia last month.
Hu says the bank is seeking to grow its foreign currency institutional investor business in China to the tune of 50% over the next two years. “But the domestic currency business will start from a very small base and could grow multiple times in the next two or three years,” he adds.
Of the new hires, Lan has spent the past two years with a European commodity hedge fund. Prior to that, he worked for two years with Citi’s China equity derivatives and structured products team based in Hong Kong.
Wang, who has spent the past four years in bond and structured product sales with China International Capital Corporation, will now be working with Citi’s capital markets origination and local trading desk to expand business opportunities in both primary and secondary markets.
Yang, who was most recently an FX trader with Bank of Communications and before that a treasury dealer with Hang Seng Bank (China), will be striving to build up the US firm’s interbank business.
All three will be based in Shanghai and will report to Ji Yang, Citi’s head of investor sales for China.
These latest hires come after Citi announced the expansion of its investor sales team across Asia-Pacific last month. That expansion included two hires in China: Dehua Shen from Nomura joined in Beijing to build the non-bank business in northern China; and Stephenni Xie, also from Nomura, started in Hong Kong a little over a month ago, covering marketing to Chinese clients of G-10 fixed-income bonds.