Industry March 2012

Banks in Japan Continue to Hire

• Not just strong yen and M&As driving demand
• Both local and foreign firms in Japan are hiring
• Technical skills and industry background preferred
• Some 64% of firms see business increasing in 2012

The replacement of departing staff points to an active banking jobs market in Japan, where people are not afraid to change jobs and where the strong yen and cross-border M&As are not the only driver of vacancy activity.

Japan’s banking sector is a standout in Asia, as banks continue to hire people with specialist skills and vacancy activity grows. While this activity has not returned to levels predating the global financial crisis, it shows, nevertheless, that the impact of current global economic conditions has not been as intense in Japan as in some of its Asian neighbours.

The growth of Japan’s banking sector is most obvious in investment banking, where the strong yen has fuelled cross-border M&A activities. While globally many investment banks have cut compensation for junior bankers, in Japan both local and some foreign firms are hiring. As a result, good bilingual investment bankers are in demand for cross-border M&As, to take advantage of increased interest from Japanese firms in overseas acquisitions.

But this is not the only factor behind the growth in vacancy activity in Japan’s banking sector. Another consideration is the confidence of candidates, who are exploring their options in the jobs market and moving to benefit from new opportunities. Thus one main driver for hiring remains the need to replace departing staff.

Another factor among the majority of hiring managers is a strong desire to recruit. Overall, many of the roles which were put on hold during the last few months of 2011 have already opened up or will so do in the months ahead. And with most firms announcing and paying bonuses, this quarter is usually one of the most active for hiring.

There has also been a pick-up in the number of senior-level roles that are not just backfills, but new roles to manage new business initiatives.

Off-shoring has been well publicised for some time. But, while the trend continues in back- and middle-office operations, demand remains for specialist functions in those areas, especially for roles that must be located in Japan and deal directly with Japanese clients or regulators.

In middle-office operations there is a broad range of roles available, including in such specialist areas as the know-your-customer (KYC), anti-money laundering (AML) and client on-boarding fields. Corporate banking relationship managers, salespeople and banking operations specialists are all in demand.

Sell-side front office vacancies are also increasing, following the usual slow final quarter of the calendar year. The overall trend is a greater volume of roles in revenue generation and business-critical functions. The areas of compliance and market risk remain very active, as do credit risk- and liquidity risk-focused roles.

Demand also exists in the finance-technology market for bilingual project managers, due to offshore project growth. Also, requirements in treasury and corporate banking will increase due to the new collateral regulation in order to maintain their consistent cash flow. Insurance IT is another hotspot, as some insurance firms started allocating new hiring budgets which were lost as a result of the earthquake in March last year.

But balancing Japan’s growing vacancy activity with global conditions is a challenge. It has resulted in employers becoming far more deliberate in their hiring, and making sure both vacancy and need exist before they hire.

This has led to a more complex headcount approval process. But, while longer and more detailed approval processes have become standard, hiring managers have become better at reading the process and are able to speed things up, particularly when competing for candidates.

There remains a preference to hire people with the right technical skills and industry background, the reason being that such candidates add immediate value.

Looking ahead, the recently released Hays Salary Guide indicates that, in the next 12 months, 64% of employers expect business activity to increase, while 41% expect their permanent staff levels to increase. So, overall, we are optimistic about the market in 2012.