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Wednesday, 14 January 2009

Axe still swinging in Asia

Investment banks in Asia are likely to reduce headcount even more this year, with most redundancies coming in the first quarter.

While the reductions will cut across ranks, senior staff on high salaries are more vulnerable because firms can replace them at lower cost, says Tan Soo Jin, a director at search firm Amrop Hever Group.

The layoffs will hit non-revenue-generating middle and back-office roles hard and are likely to be split fairly evenly between Singapore and Hong Kong.

Big names like Merrill Lynch, Morgan Stanley, J.P. Morgan and Goldman Sachs have already shed staff in Asia and are expected to axe even more as the economic picture gets gloomier.

Deborah Sawyer, partner at executive recruitment agency Odgers Ray & Berndtson, comments: “Expect Bank of America to fire people due to the merger with Merrill…BofA didn't have a brokerage or corporate finance advisory business before, so the cuts will be in areas of overlap, mostly operational roles in the middle and back offices. You may see some in fixed income too.”

Nomura will do something similar due to the Lehman acquisition, adds Sawyer. “There is some speculation that they didn't realise the salary costs would be so high and they can't handle all the guaranteed bonuses they handed out especially when these areas are not going to be profitable for the foreseeable future,” she says.

Other banks pondering more bloodletting include RBS and Standard Chartered. These firms are “reviewing every single business unit in the world. Literally everything is on the table and no one in the firms knows the answer yet,” says one recruiter who asked not be named.

If there is a silver lining, it’s that the first three months might be the worst for job cuts this year, says Hong Kong-based Bryan Lim, director of Recruitment Intelligence Consultants.

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