Job cuts sweep through banking industry in Greater China and Hong Kong

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1st February 2024 – (Hong Kong) HSBC’s Greater China commercial banking division has reportedly dismissed at least four bankers based in Hong Kong. This development, amidst a backdrop of a contracting job market for investment bankers in the region, signals a distressing period for the industry.

According to a BBC report, an investment banker from a Chinese-funded bank, Mr. Tse, has highlighted the stark lack of employment opportunities for his peers in Hong Kong. Tse’s firm reduced its workforce by 10% in June of the previous year, with indications that further cuts could be forthcoming. The downsizing has been a recurring pattern since last year, affecting both foreign and Chinese banks alike.

Mr. Tse emphasized the business shortfall over the last two years, noting an absence of substantial projects to sustain the sector’s growth.

Another senior banker from a Chinese-backed institution, referred to as Mr. Wong, conveyed that his bank has been promoting voluntary resignations to mitigate the impact of layoffs. Expressing his concerns about the lacklustre performance of the Hong Kong stock market, Mr. Wong is contemplating emigration, unwilling to bind his future and finances to the region’s uncertain prospects.

The trend of job reductions is not limited to smaller institutions. Global banking giants, including Bank of America, UBS, and JPMorgan Chase, have previously announced significant layoffs. Data shows that Bank of America had cut over 20 investment banking positions in Hong Kong, while UBS downsized around 20 bankers in Asia last year, mainly those connected to Mainland China operations. JPMorgan Chase similarly reduced its investment banking staff in Asia by over 30.

UBS Group AG is considering approximately 90 job cuts in Asia within its private wealth and investment banking divisions as of March, due to the downturn in China’s stock market and a decrease in dealmaking activity that has impacted revenues. Sources familiar with the plans indicate potential cuts of roughly 70 jobs in private banking and 20 in the global banking division, largely affecting Greater China and Singapore.

The Zurich-based lender is preparing for the cuts after bonus discussions with staff, which could include bankers from the recently integrated Credit Suisse. The wealth management division of UBS, significantly expanded post-merger, is bracing for one of the most substantial retrenchments seen in Asia.

Other major firms like Goldman Sachs Group Inc., JPMorgan Chase & Co., and Citigroup Inc. have also conducted several rounds of layoffs in Asia over the past 18 months. The decline in Asia’s stock offerings outside Japan by 30% last year, as opposed to a 45% increase in the U.S., is indicative of the challenges faced by the sector.

A spokesperson for UBS in Hong Kong declined to comment on the specific job cuts.

The broader layoffs come as UBS plans to realise savings of around $6 billion in staff costs in the coming years, following the acquisition of Credit Suisse. UBS’s Chairman Colm Kelleher has cautioned that 2024 will present further challenges, even as the bank has surpassed initial targets for staff reductions after the merger.