Global investment banks are pushing ahead with ambitious expansion plans in Shanghai even as a strict lockdown on Chinese financial capital forces them to make emergency food deliveries to some staff and leaves others camping on the streets. parquet floors.
Shanghai’s lockdown, entering its fourth week in some districts and part of Beijing’s policy of eliminating Covid-19 cases, is one of the biggest tests yet of Western banks’ resolve to create companies in a country where national lenders have long dominated.
Goldman Sachs and JPMorgan Chase are among the banks that have transferred staff from Hong Kong to Shanghai in recent weeks. They are also part of a group, including Morgan Stanley, Citigroup, UBS, Credit Suisse and Deutsche Bank, which have singled out Shanghai as a major investment target in the coming years.
“We’re trying to build a 50-year-old business in China,” said a person familiar with Goldman’s plans. “A disruption over several months is not enough to change strategic thinking.”
Wall Street banks have stepped up their push into Shanghai in recent years, hiring hundreds of staff, as Beijing has continued to gradually open up China’s financial services sector and capital markets.
The government has outlined plans to make China’s most populous city a global financial center by 2035 and turn the Shanghai Stock Exchange into the world’s largest.
Nonetheless, China’s biggest lockdown since the start of the pandemic is proving disruptive to the largely local workforce employed by the banks. According to a person close to the bank, only a handful of Goldman’s 200 employees in Shanghai are expatriates, a share similar to that of its Western competitors.
With residents mostly confined to their homes, Goldman last week delivered food to its staff in Shanghai, which involved acquiring special licenses to drive a vehicle in a city still largely locked down and home to 23 million people.
“We are not Uber Eats, we are an investment bank,” said a person familiar with the matter, pointing out the complicated logistics involved. JPMorgan and Morgan Stanley also delivered food and emergency supplies such as formula to home staff.
“We try to deliver food or other basic necessities to our employees,” said the Asia manager for a Wall Street bank. “We try to help them as much as possible, but there’s hardly much you can do.”
“It’s not nice for our people but they’re doing remarkably well, probably because as mainlanders they accept it with a degree of stoicism that outsiders might find it harder to accept,” they added.
The need to settle transactions means some Goldman and JPMorgan employees have remained camped in the office since Shanghai closed its financial district on March 27. someone familiar with the subject.
Goldman and JPMorgan did not comment on their offices in Shanghai.
There have been several initial public offerings on the Shanghai stock exchange since the lockdown, with Chinese oil giant Cnooc raising more than $4 billion this week. The fact that the stock market has remained open has limited disruption from the lockdown, the Wall Street bank’s Asia head added.
Citigroup said a “huge digital transformation of business and corporate banking in China” meant its operations in Shanghai had not been significantly disrupted by the lockdown.
Yet some wonder whether this lockdown, which comes on top of two years in which China’s zero Covid policy has interrupted the ability of international groups with Chinese clients to do business in the country, could ultimately induce banks Westerners to moderate their ambitions.
“How can Goldman Sachs or anyone else say with comfort that we’re going to put more money into working in China when we haven’t had senior executives [enter the country] or have been able to meet people for two or three years? said Fraser Howie, freelance China analyst and author. “It’s business as usual for now, but the strategy cannot remain unchanged.”
Investor concern over the threat of extended shutdowns has sent the CSI 300, China’s largest stock index, down nearly a fifth this year.