December 6, 2023

Investment Banking

Let Your Investment Banking Do The Walking

Chinese bankers are losing their jobs as banks reverse growth strategies

China is taking a beating from investment banking job cuts as firms reduce headcount in the Asia-Pacific region.

Credit Suisse has become the latest bank to cut heavily, with around 20 China-focused bankers understood to be losing their jobs, according to a report by Reuters, amounting to around one third of its investment banking team. This followed a similar move by Morgan Stanley, which cut 40 jobs in APAC, with the bulk hitting China.  UBS has also trimmed headcount in its China investment banking business, but only two bankers have been let go, according to sources.

It was Goldman Sachs that set the ball rolling on the Chinese cuts, however. In October, made a number of cuts in its China investment banking business.  

China is bearing the brunt because banks have spent the last three years building out their presence in the mainland after the country relaxed rules on ownership of foreign joint ventures. That sparked a dash by big banks to increase their stakes in local operators and staff-up.

But rising US-China tensions and a sharp downturn in deal activity fuelled by a combination of government intervention in certain industries and a downturn in the real estate sector sparked by the collapse of Evergrande have hit deal volumes which have failed to live up to expectatioms. 

One Hong Kong-based headhunter said:“China bankers are going to find it tough to find new jobs. Capital markets activity is dire and doesn’t look like improving any time soon.  Debt capital markets and high yield are heavily linked with real estate in North Asia and China.”

As banks look to trim headcount globally, China is therefore seen as ripe for cutting. “If you’re a US bank or a European bank with a China business, you’re going to be long of China bankers and very short of China revenue.” the headhunter added. While overall fees across APAC are down by 16% year on year, investment banking fees in China have slumped by 58%, according to Dealogic

Credit Suisse’s move to cut staff from its 51%-owned China joint comes just weeks after its Singapore-based Asia Pacific chief executive Edwin Low said that over the next five years, “China and Hong Kong will be the biggest growth market for us.”

Credit Suisse dropped one spot to tenth in the China investment banking fee rankings in the first nine months of the year, but its fees fell by 70%.  One senior banker at a rival said. “China is a core market for CS, but it’s not making them any money at the moment. By contrast, they have a great business in South East Asia, so why would they cut there. They only moved a number of bankers onto the platform in Beijing last year and in addition to new hires, they’ve got quite a big presence, and they can’t tolerate losses at a time when the bank is looking for external investors.”

Credit Suisse is looking to raise capital and is planning to carve out its investment banking and capital markets business into a separate entity as part of a restructuring plan that will shed 5,000 jobs.  The bank has said it will cut 2,700 jobs globally by the end of the quarter.  On November 23, Credit Suisse issued a profit warning for the fourth quarter, saying it could make a pre-tax group loss of up to CHF1.5bn.

A spokesperson for Credit Suisse would not comment on individuals or specifics regarding headcount reduction, but said that “APAC represents exciting opportunities and remains a key pillar of growth for the bank globally.”

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