| Asia’s investment banks hand out pink slips as EU crisis bites |
HONG KONG Investment banks and brokerages across Asia have launched a sweeping round of job cuts as Europe’s debt crisis and China’s economic slowdown bite into the region’s financial activity.
Bankers and other industry sources said at least 50 people were let go in the past three weeks, a cull that includes senior expatriates as well as junior bankers. The cuts mainly target the equities business, with more layoffs expected in coming weeks.
CLSA, Deutsche Bank, Goldman Sachs, and UBS were among the banks and brokerages that cut jobs, the sources said.
“In response to a market environment far worse than anticipated and considerable over-capacity in the industry, we have made the difficult decision to make some positions redundant,” said Anna Tehan, a spokeswoman for CLSA.
CLSA, an Asia focused brokerage, has prided itself over the years in keeping cuts low, with employees previously taking voluntary pay cuts to stay on board. “A very small percentage of our workforce is affected, from across all areas of the business,” Tehan said, adding that the firm would not comment on specific reduction numbers.
Two sources at CLSA said tens of jobs were cut across the region in the last two weeks, with one saying specifically they included 25 staff in Hong Kong, and 10 in India across sales, core research and the new India Reality Research division.
“Banks have cut 5-7 per cent of staff, which is unusual as this cut usually happens in November and December,” David Azar, managing director, equities at recruitment firm Pemberton Stewart, said.
“We see more cuts in the next few months.”
Asia, where banks staffed heavily in the last few years to capture the growth of developing economies, saw cutbacks at the end of last year as deal and trading activity slowed in the wake of early signs of Europe’s woes. But the latest round of layoffs comes as hopes for a strong first half faded quickly after the first quarter. China’s slowdown in growth, after years of supporting the surge in Asia’s financial activity, has hit particularly hard.
The Asia cuts also come at an unexpected time, when expatriate finance professionals are preparing to hunker down for the summer while their families head home for the holiday.
“I’m disappointed, but in some ways I’m glad I was cut early in this round, because everyone is looking over their shoulder,” said Cassandra Lister, who was recently let go as a managing director at Societe Generale in Hong Kong. “They’re looking around and wondering ‘Am I next?’ It’s a horrible work environment.” Like all regions in the financial industry, Asia usually sees a year-end trimming of headcount. After the 2008 financial crisis, many banks cut from the bottom, firing junior staff to keep numbers low while the workload was light.
In the current wave, more senior and expatriate bankers are leaving, a trend that gained steam last year amid a sharp focus to retain roles that were either client-facing or revenue generating, preferably both.
The emphasis on cuts in equities divisions is unusual for a market driven by stock sales and issuance, but reflects how weak Asian markets have been this year.
Equity market activity typically generates around three-quarters of annual revenues for an investment bank in Asia. Although debt issuance is robust in the region this year, equity capital markets are struggling - a fact keenly noted by bank headquarters in New York and London that have shelled out loads of money for Asia expansions in the hope the fee pool will grow.
“The Street has never had to come to grips with the cost base out here until now,” said the top Asia executive at an investment bank, who did not want to be named. “The US office doesn’t want to subsidise Asia anymore.”
While pockets of Asia have seen bursts of financial market activity, such as Japan and Malaysia, China’s slowdown has had far-reaching impact.
Equity capital market deals in Asia ex-Japan, including IPOs and follow-ons, are down 47.5 per cent in 2012 through mid-June to $67.8 billion.
Agencies
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