Fresh round of job cuts hits banks across Asia
Banks embarked on another round of job cuts this week in Asia, laying off hordes of staff in fixed-income, derivatives and equities businesses, hit by weak trading revenues and a slowdown in dealmaking and new issues.
November 04, 2011 / 09:43 IST
Banks embarked on another round of job cuts this week in Asia, laying off hordes of staff in fixed-income, derivatives and equities businesses, hit by weak trading revenues and a slowdown in dealmaking and new issues.
The first round of Asia job cuts began in earnest at the end of September as strict capital rules and a tough third quarter for trading income took their toll, hitting investment banking in particular.Asia's rapid growth had largely spared it from significant job cuts that affected other regions since the 2008 financial crisis. But that is not the case this time around.In view of the deteriorating market conditions Dutch banking and insurance giant ING intends to cut almost 2,700 jobs. This is despite a stellar third quarter performance. The management says that it needs more clarity about the crisis in Greece.Netherlands alone is likely to see 2,000 job losses, which will help the company save 300 million euros a year by 2014. Another 700 jobs are set to go outside of its domestic market. But job cuts seem to be the trend of the market, banks such as Dutch Bank, ABN AMR, JpMorgan Chase and Credit Suisse are shedding jobs worldwide.Banks such as Credit Suisse and Japan's Nomura Holdings recently disclosed broad cost-cutting plans, and while Europe appears to be the focus for much of the culling, the axe is falling on Asia as well.Australia's Macquarie Group Ltd, Bank of America and Spain's BBVA also went through a round of cuts this week in Asia."Looking at the P&L (profit and loss) at banks right now, I'm surprised that the cuts are not deeper," a senior bank official told Reuters."Until the middle of this year, a lot of people were building their Asia desks," said the official who declined to be identified as he is not authorised to speak to the media.Some banks such as Morgan Stanley stopped hiring by mid-year, according to a banking source, in anticipation of a tough second half.MORE PINK SLIPSIPO volumes and proceeds, normally around two-thirds of the investment banking revenues in Asia, dropped in the second half, as global markets fell on worries mainly on the euro zone debt crisis.There were no stock deals between late July and late September in Hong Kong, the world's top destination for IPOs in the past two years.Only recently companies resumed IPOs and follow-on deals, but volumes in the third quarter in the region excluding Japan declined 49 percent from a year earlier to a two-year low.Such a low volume not only hits staffing levels but bonuses too.Asia pink slips are even beginning to hit the cash-equities business, sources say, a bread-and-butter unit usually the last to be impacted, underscoring the tough market conditions.Credit Suisse, which announced another 1,500 job cuts globally earlier this week, has already cut dozens of jobs across Asia, hitting much of the credit division, sources told Reuters. It is also cutting jobs in forex trading, sources said.Macquarie chopped jobs at its equity-trading division in Asia. Reuters reported on Thursday that its global head of equity derivatives quit.Macquarie closed part of its equity-derivatives operations in Hong Kong, cutting seven jobs, according to Bloomberg. UBS said in an analyst note in September that Macquarie should cut up to 1,000 jobs.Goldman Sachs has let go some research analysts over the last month, including staff in Hong Kong, Taiwan, South Korea and India, another source added.Nomura Holdings posted its first quarterly loss in 2-1/2 years on Tuesday due to a slump in investment banking revenues and tripled its cost-cutting target to $1.2 billion to cope with market conditions a top executive said were about as tough as the 2008 financial crisis. BBVA has laid off several fixed-income traders in Asia, sources said. Spokespersons at all the banks either declined to comment or could not immediately be reached.With inputs from Reuters Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
