Monday, July 15, 2024

Morgan Stanley and HSBC Initiate Significant Job Cuts in Asia Pacific Investment Banking Due to Market Downturn


Morgan Stanley, HSBC to cut dozens of investment banking jobs in Asia Pacific region: sources

In a significant development this week, Morgan Stanley and HSBC are initiating job cuts across their investment banking sectors in the Asia Pacific area, according to reliable sources. This decision is part of a broader strategy to reduce costs amidst a challenging period characterized by reduced deal-making and slower market performance, particularly in China and Hong Kong.

Morgan Stanley is set to eliminate at least 50 investment banking positions starting this week, which constitutes around 13 percent of the bank’s 400-strong investment banking workforce in Asia. This move is informed by sources acquainted with the proceedings who chose to remain anonymous.

Similarly, HSBC’s investment banking division commenced layoffs on Tuesday, with expectations to let go of approximately 30 dealmakers in the region within the same week. These layoffs at HSBC, a bank that generates the majority of its profits from Asia, underline the severe impact of the current market downturn on its operations.

While Morgan Stanley opted not to comment on these job cuts, inquiries made to HSBC did not receive an immediate response.

This round of layoffs might not be isolated, as other global investment banks face mounting pressure to tighten their belts due to diminishing incomes from capital market transactions and mergers and acquisitions (M&A) advisory services.

These reductions signal a notable shift in the fortunes of Wall Street banks in Asia. Not long ago, these banks were expanding their operations in the region to capture a larger share of its burgeoning deal-making activities, particularly those centered in China.

The current cuts are some of the most substantial in recent times for the China-focused investment banking teams at Morgan Stanley and HSBC. This trend mirrors actions taken by other banks that have been negatively impacted by a downturn in deal-making in China, which is grappling with a slowing economy.

Fundraising through initial public offerings (IPOs) has significantly declined. Hong Kong’s stock exchange experienced a 30 percent year-on-year drop in IPOs, raising only $600.28 million in the first quarter, marking its lowest since 2009. Furthermore, IPOs by Chinese companies on both domestic and international exchanges plummeted by 80 percent in the first quarter compared to the previous year, collecting just $2.9 billion.

The mainland China market saw an 82 percent decrease from the previous year in IPOs, gathering a mere $2.4 billion during the same period – the lowest quarterly fundraising since the fourth quarter of 2018. Moreover, the total value of M&A deals involving China reduced by 36 percent, directly affecting the fees earned by bankers for advising on such transactions.

This wave of job cuts, which initially began in late 2023 on the Chinese mainland and in Hong Kong, is expected to accelerate in the current year, as indicated by banking professionals and recruitment specialists. This is echoing the broader downsizing trend observed throughout the investment banking sector, including significant layoffs at Bank of America, UBS, Citigroup, and several boutique firms in January. These adjustments come as banks worldwide strive to manage costs amidst an uncertain economic outlook, with Citigroup among those experiencing the most substantial reduction in employees during the first quarter.

As the financial sector braces for these changes, the ripple effects of these layoffs are anticipated to be felt widely across the Asia Pacific investment banking scene, marking a period of adjustment and recalibration for many of the world’s leading financial institutions.

Alexandra Bennett
Alexandra Bennett
Alexandra Bennett is a seasoned business journalist with over a decade of experience covering the global economy, finance, and corporate strategies. With a Bachelor's degree in Economics and a Master's in Business Journalism from Columbia University, Alexandra has built a reputation for her insightful analysis and ability to break down complex economic trends into understandable narratives. Prior to joining our team, she worked for major financial publications in New York and London. Alexandra specializes in mergers and acquisitions, market trends, and economic

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