More job cuts are announced in Asia in banking and finance services

The bad news for Asia’s banking and finance professionals has continued unabated in the past few months as more job cuts are announced in Asia by big financial institutions. Last month, Deutsche Bank AG has eliminated about 85 jobs at its Japan and Hong Kong equities units as Europe’s widening debt crisis curbs economic growth in Asia.[1]

Bank of America Merrill Lynch is planning to announce a wave of job cuts at its Asia markets division which will total up to 40 people two people. The global markets unit, which deals in fixed income, equities, currencies and commodities trading, has been hurt by weak trading volumes and a drought in initial public offerings.[2] Daiwa Securities Group Inc. has also announced in the last week of September that it will eliminate 50 derivatives jobs in Hong Kong and may shrink investment banking and equity research in the city. Tokyo-based firm has already eliminated 500 positions in the last 12 months[3]:

A Hong Kong-based recruiter, who declined to be named, says job losses were across the board, with both junior and senior bankers axed. “Of course morale is low. All firms, not just Deutsche Bank are rationalising their commitment to equities because they’ve struggled to make the required rate of return. At the same time, they’re refocusing on areas where they have competitive market share.” 

The future of Asia’s equities professionals appears bleak at the moment. Trading volumes have dropped off and so have the number of IPOs. The Financial Times quoted a source as saying: “By the end of the year, I reckon every equities team will be down by at least 20 per cent compared to the start of the year.”[4]

Hong Kong

According to Simon Mortlock writing for efinancialcareers.com the decisions makers have recently returned from a longer and less active summer break than usual and they have found themselves in an economic environment lacking of a recovery in the markets:

Banks’ optimism about Asia compared other regions also helped to delay redundancies, adds Damian Babis, director, Capital People. 

Bonuses are a factor, too. Because falling profits have diminished their bonus pools, firms want to make sure their top performers receive the bulk of what’s left. Cutting underachievers now, before bonuses are due, leaves more money in the pot. And when hiring decisions are made for next year, it also frees up headcount costs for business units that are expected to be profitable, says Babis. 

All this has been exacerbated by the move to electronic trading and the resulting decline in commission rates for investment banks. “In equities, the business model has fundamentally changed. Low-touch trading, which is less staff-heavy, has replaced high-touch trading,” says Pearmund.[5]

[1] - Deutsche Bank Said to Cut 85 Equities Jobs in Tokyo, Hong Kong
[2] - Bank of America Plans Asia Job Cuts
[3] - Nomura Said to Cut Up to 30 Jobs in Americas Equities
[4] - More equities heads roll in Asia; here’s more on Deutsche’s latest cuts
[5] - Why BoAML, Daiwa and others have held back on Asian job cuts until now, despite markets being rubbish for ages