Demand for taking IPO sponsor examinations surged significantly in recent weeks, with banks seeking to qualify as many workers as soon as possible, said Kevin Liem, who heads the Hong Kong Securities and Investment Institute, which organizes the exams. Upcoming dates are so full that physical exam sites in Hong Kong as well as overseas and even online ones will remain open through the Lunar New Year holiday, he said.

The number of responsible officers — or those in line to become one — for advising on corporate finance has fallen by 90 since 2020 to 1,185 at the end of last year, the SFC said. In the intervening period, firms including Bank of America Corp. and Morgan Stanley axed jobs. Hong Kong currently has 445 principals, according to the commission, though how that compares to prior years isn’t clear.

Poaching has now become common, especially in the past four to five months, said Sid Sibal, managing director at financial-services headhunter Aster Recruiting. Sibal said he had seen principals jump to another bank with above-the-norm pay rises of as much as 45% in recent months.

“If someone is not a signing principal right now, they’re not interviewing them,” Sibal said of banks seeking senior hires. This preference demonstrates the need to get on deals as soon as possible instead of waiting for the bankers to attain credentials, he added.

The SFC also decried the inexperience of broader IPO teams, on top of the principal shortage. For example, more than 40% of deal team members at two banks had less than one year of experience in Hong Kong IPOs during the 2024-2025 period, it said.

Banks may also face challenges in finding people internally to elevate as principals because mid-level bankers — who may have racked up enough experience — bore the brunt of layoffs during the downturn, Mullally said. “You can’t make an associate-level banker a signing principal,” he added.

The 13 banks that got warning letters have until this week to report the names and number of principals and how many active deals they’re on. Expect the number of listing applications to drop in the coming months as IPO arrangers sort their staffing issues, said Ke Geng, a partner at the law firm O’Melveny & Myers LLP.

Bankers and issuers are developing strategies to deal with the increased regulatory scrutiny, with the IPO wave showing no sign of abating. Issuers that were dropped by busy banks are looking for new sponsors to take them on. Some banks have weighed prioritizing higher-profile projects.

“They have to decide whether to drop some of the deals or delay some,” Geng said.

–With assistance from Amanda Wang.

(Updates with upcoming deals in sixth paragraph, adds video.)

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