Brain gain: New boutiques, deals surge lure expat bankers back to Australia

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By Scott Murdoch

Australian expatriate investment bankers are returning home in large numbers, lured by the launch of new boutique advisory firms, a sharp pick up in deal-making and the safety of a country relatively unscathed by the coronavirus pandemic.

Signs of a strong economic rebound from a brief pandemic- induced recession are underscoring a trend that is starting to reverse a long tradition of Australian bankers heading overseas to more tax-friendly global financial centres.

"There is a brain gain happening in Australia, we are acquiring additional knowledge and experience," said Nick Hughes, Australia co-head at UBS.

Corporate Australia has set a scorching start to 2021, with$6.21 billion worth of M&A deals already underway, more than seven times higher than the same period last year, according to Refinitiv data. That puts Australia second in the Asia Pacific in terms of deal value, behind only China, compared to its seventh place ranking over the same period in 2020.

The trend is expected to continue in the near-term, with big-ticket deals such as the possible sale of casino operator Crown Resorts, and the divestment of some financial businesses in the pipeline.

The entry of two boutique firms, Barrenjoey Capital and Jarden, into the fray has fuelled a talent war in the country and pushed up wages by at least 20%, making it a rare bright spot for rainmakers.

Jarden, the Australian offshoot of the New Zealand investment bank, has hired eight Australian expatriate bankers traders and analysts as part of its campaign to build out its local franchise, according to a spokeswoman.

Goldman Sachs has had eight Australian staff return from offshore to work in Australia, and Swiss bank UBS has had four returnees in the recent months, according to the banks' spokeswomen.

Bank of America has hired two senior expatriate bankers, the bank's country head Joseph Fayyad said.

"With new entrants establishing a presence and the incumbents defending their positions, there are more available seats for senior bankers," Sydney-based Fayyad told Reuters.

Most of the returnees are landing in Sydney from London and New York. Their experience ranges from mid-career to senior bankers and legal and compliance staff.

They are among a lucky few currently allowed to enter Australia, which closed its international border to almost all travellers but returning nationals and permanent residents months ago as a pandemic shield. The dramatic step has appeared to pay off with Australia recording under 30,000 COVID-19 cases and 910 deaths, far fewer than many other developed countries.

"I think Australia's outperformance during COVID has put a real spotlight on the benefits of working and living down under, so the combination of more available seats and a greater desire from Australians to come home has really fuelled the trend," said Fayyad.

The return of the expatriates counters a long-established trend of Australian finance professionals moving offshore, partly to gain experience and partly to escape Australia's relatively high personal income tax rates.

Local banking executives said increased onshore deals activity means banks are able to offer fatter paychecks for returnees used to New York and London salaries.

Jarden Australia head of investment banking Aidan Allen said the "brain gain" had helped the emerging bank build its team to almost 100 since its launch a year ago.

"A lot of our talent has come from offshore, people wanting to return home has been a massive opportunity for us," Allen said. "We think it's a point of difference, it's given us the opportunity to have a more diverse and experienced bench."

Rival Barrenjoey launched in September with 50 staff and now has about 220 people, a spokeswoman said.

The influx of the expatriates should also be a warning for incumbents, BofA's Fayyad said: "Bankers that have been here for some time need to acknowledge there is a new crop of talent who have a bit of hustle, a spring in their step, who want to make their mark."

© Thomson Reuters 2021.

©2021 GPlusMedia Inc.

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Australia's prison island status will force some ex-pats back as it will be the only way they can see their families. Some will also escape places like Hong Kong. Nobody 'takes back control' quite like China.

That doesn't mean that 'Straylia has dealt well with Covid or that it a metric that should determine anyone's future.

The Aussie vaccination programme is slow and it will remain sealed off from much of the world for some time. It is also in the front line as we experience climate change. There will be more fires and floods. Australia is unusual in how much of it cannot sustain life, at least not in the modern, suburban sense. That percentage will increase as more of it is rendered uninhabitable. Australia may be the first place to switch to nocturnal office hours, to deal with the heat. It's a good place for solar of course, but they seem to like coal rather more. If anything, Australia may be somewhere to emigrate from, before it becomes difficult to escape your own regime and squeeze in to someone else's country.

Israel has led the world on vaccinations, but I wouldn't advise going back there, as it is on the edge of war with its neighbours.

The UK also has a good vaccination programme, but I wouldn't suggest returning there either. The lockdowns have savaged the economy and society, as has Brexit. It used to be a great place to do business. No more. There are import blocks and export blocks, and even post-pandemic (if there is a post-pandemic), there will be no free movement.

The UK may actually be a good place to start an emigration service, despite the vaccine roll out.

Nationalists love repatriation and border blocks - chucking out the foreigners and ending the refugee problem, so Covid has been something of an early Chirstmas present for them in the quest for self-sufficiency. Expect to see more repatriation propaganda on your local news sites and TV.

To deal with the loss of migrant talent, the UK government are promoting STEM subjects, forcing university cuts in the humanities an social sciences. Combined with the loss of European cash and income from Covid-blocked foreign students, UK universities are on their knees and will have to do whatever the government order them to. But that won't see aspiring poets and art historians buying Raspberry Pi systems and getting into coding, or unemployed shop staff becoming farm hands, replacing migrant labour.

Foreign universities (including Japanese ones) might consider offering online degrees in the humanities and social sciences to UK citizens. Whether 3 years (terms) or 2 years (office hours), they would be much cheaper than residential degrees. Producing an entire course of degree content is quite cheap. Course texts are available as books or e-texts. A small number of qualified staff can be used to produce content, mark papers and offer one-to-one and seminar sessions online. As the UK government hammers down on the UK's (expensive) domestic universities, a cheap alternative would be very popular. Staff sacked from UK universities as faculties are reduced or closed can even be hired by foreign universities to operate the courses from within the UK.

The nationalist belief that the proletariat can simply be nudged into picking turnips and IT security after having their industries crushed by government lockdowns, may not be 100% accurate. It didn't work well for Chairman Mao and it won't work well in the UK either. Already sectors that used to rely on migrant labour are finding it impossible to function without it, and cannot source replacements from amongst the locals, many of whom simply cannot do the jobs adequately. That's not just in the UK. It's a problem in the US too. GAFA was built with immigrant labour. Without it, and being forced to sack anyone whose politics is not 'woke' enough, they are struggling to fill positions. And GAFA is the engine of the US economy, even though its ability to innovate has tailed off.

Meanwhile, despite Covid, Indian coders who would have left for the promised land of California, are stuck in India. That is of more benefit to India than the US, and may see a renaissance of tech ventures there, courtesy of US border blocks. India still looks the most likely to create the next generation of non-Chinese globally dominant tech and replace GAFA, as it has the skills base, the VC (domestically or from outfits like SoftBank) and the English language ability to globalise their products.

Trump, USG attacks and now the Covid border blocks may have signalled the beginning of the end of GAFA's dominance. That is a remarkable own goal by the United States.

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