November 30, 2023

Investment Banking

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Bankers in Hong Kong fear ‘second round’ of job cuts

Morgan Stanley is looking to cut jobs in its investment banking business in Hong Kong and across Apac and US rivals could follow suit as a second wave of redundancies looms in the region.

“A second wave is coming, it’s inevitable,” said one banker in Hong Kong. “Headcount is still way too high relative to market activity.” Morgan Stanley is discussing plans to cut around 3,000 jobs globally by the end of the second quarter, with the investment banking and trading operations expected to bear the brunt of the redundancy programme.

This would be Morgan Stanley’s second round of cuts, coming just two months after it trimmed 2% of its workforce, with equity capital markets bankers in mainland China being among those affected.

According to Bloomberg, the bank is looking to make a fresh round of redundancies after CEO James Gorman said he doesn’t except to a rebound in dealmaking activity before the second half of the year.

The move by Morgan Stanley could prompt rival US banks to follows suit with a second round of redundancies, with sources in Hong Kong saying that Goldman and Citi may also be planning to make similar cuts, although they did not specify which businesses would be affected.

Goldman has so far just led one round of redundancies, cutting 30 people in Hong Kong in February, including 10 bankers in its Chinese business as part of a round of global cuts.

Citi’s CEO Jane Fraser echoed Gorman’s gloomy outlook, saying in an interview at the Milken Institute Global conference that the bank expected a recession at the back end of the year.

While Citi has resisted making any big cuts, Fraser said that she would be prepared to ‘adjust staffing levels’ in its investment bank if conditions did not improve. Fraser is being cautious though, as she insisted that Citi is playing the ‘long game’ in investment banking.

The prospects are looking brighter in Citi’s commercial banking business where it is looking to add 100 staff in the Greater Bay area. Anson Kwok, head of Citi’s commercial bank at Citigroup in Hong Kong said the unit is expanding after recording 11% year-on-year growth in new clients in the first quarter of this year.  The bank has made the expansion of its commercial bank, which focuses on its smaller and medium-sized clients, a strategic priority.

“The re-opening of the border with China could mean that the region fares better than the US, and as Citi’s hiring plans suggest, there could be a surprise to the upside,” said one headhunter in Hong Kong.

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