A competition to attract talent among global investment banks has erupted in Japan. Following the ‘tariff war’ of the Donald Trump administration, a significant influx of investments into Japan, perceived as relatively safe compared to the United States, has increased the demand for personnel.
On the 11th (local time), Bloomberg News reported that "while banks in financial hubs like Hong Kong and London have embarked on staff reductions due to market instability from the trade war, global corporations are flocking to Tokyo, resulting in a shortage of financial personnel."
According to Bloomberg News, Citigroup is increasing the personnel of its investment banking team in Japan by 15%, while JPMorgan Chase is expanding its capital raising and financial teams. Carlyle Group, one of the world's largest private equity fund operators, plans to hire 10 experts to operate a $3 billion (approximately 4 trillion won) Japanese buyout fund, and Bank of America, Bain Capital, and Blue Owl Capital are also in the process of staffing up.
The reasons for the deepening labor shortage in the Japanese financial industry are complex. First, the re-emergence of inflation, relatively low borrowing expenses, and a weak yen have coincided, leading to a surge in Japanese stocks and bond transactions, as well as increased foreign investments. Warren Buffett, who sold a large amount of U.S. stocks last year, has also increased his stake in Japan's five major trading companies this year.
Earlier, last month, the Nihon Keizai Shimbun (Nikkei) reported, citing the Japanese Ministry of Finance, that a record amount of funds is flowing into the Japanese market. According to the Ministry of Finance, the net purchases of Japanese stocks and bonds by foreign investors (excluding short-term bonds) in April amounted to 8.213 trillion yen (approximately 77 trillion won), marking the largest amount since statistics began in 2005. Additionally, major corporate transactions, such as the sale of Seven-Eleven Japan, are taking place.
Bloomberg News explained that "private equity funds that focused on China are shifting their investments to Japan, where there are many companies willing to sell and loan rates are low." Nigel Collins, head of the Japan department at international law firm RPC, stated, "Japan is overflowing with money and jobs," adding that "Tokyo will emerge as a global financial hub over the next decade."
Although the demand for personnel is increasing due to a market boom, investment banks face limitations in attracting personnel in Japan. Unlike other financial centers like Hong Kong and Shanghai, where work can be done solely in English, Japanese is essential in Japan. This makes it difficult to send financial personnel from regions like New York or London to Japan. Furthermore, Japan has a high level of workplace loyalty, making it challenging to attract talent from other corporations.
A unique talent attraction competition is also underway. Banks are offering dinners in private rooms at Tokyo's top restaurants to those they wish to hire and hosting parties. A 23-year-old, who received numerous love calls from major banks over the past year, said, "In the final stretch, banks were calling for over an hour every day and inviting me to meals." Yuta Kato, a junior student at the prestigious Keio University in Japan, said, "I am already experiencing the talent recruitment war in full swing."
The competition among investment banks to attract talent is being compared to Japan's ‘bubble era’ in the 1980s. It has become common for university graduates to receive five or six job offers. A graduate from a prestigious Japanese university who majored in humanities received offers for trading positions from a European bank and a sales position from an American bank. It is reported that banks have even persuaded individuals who declined offers for hours.
As the labor shortage deepens, wages are also rising sharply. Headhunters estimate that salaries for bond traders increased by an average of 15% last year. A recruitment official noted that investment banks have proposed annual salaries increasing by an average of 10% over the past three years, with some top traders guaranteed annual salaries ranging from $1 million to $1.5 million.