Hong Kong investment bankers could face more job cuts as the slowdown in deals with China persists and employers look to cut highly paid staff, according to Bloomberg Intelligence.
About 200 Hong Kong bankers lost their jobs last year, senior analyst Francis Chen estimated in a report on Monday. With senior bankers’ salaries 40-70% higher than their counterparts in Singapore, Hong Kong bankers may find their salaries becoming a “curse” as employers cut them, Chan writes.
“More global banks may further reduce their workforce in the city to achieve greater cost savings, especially during China’s economic downturn,” Chan said.
Global financial firms are cutting investment banking staff in Asia due to a deal drought amid worsening U.S.-China relations, a crackdown on private enterprise and a real estate crisis. Morgan Stanley and HSBC Holdings Plc are among the banks that have cut the size of their investment bank this month, with Hong Kong and China bearing the brunt.
Hong Kong’s initial public offerings have struggled, with revenue falling to its lowest level in more than two decades last year. Money raised from IPOs fell another 29% in the first quarter to about $605 million, the worst three-month period since the global financial crisis.
Despite more IPO filings in Hong Kong, IPO prospects for the city “may remain bleak”, the report said.
US dollar and Hong Kong dollar bond issuance in Hong Kong has fallen significantly from its 2020 peak, according to Bloomberg Intelligence.
According to a Hays Asia survey conducted at the end of 2023, investment banking analysts and staff in Hong Kong earned 30-100% more than in Singapore, mainland China and Japan, while directors and managing directors earned 40-70% more .
Compared to investment banking, the job market in wealth and private banking remains strong, with mainland wealth funds flowing into Hong Kong, benefiting banks such as HSBC Holdings Plc, Standard Chartered Plc and Bank of China (Hong Kong).
“Hong Kong financial professionals may face different fates due to different outlooks for the capital markets and asset management sectors,” Chan wrote.
John Mullally, managing director of recruitment firm Robert Walters in Hong Kong, told Bloomberg Television that many clients say they are at the “bottom” in terms of cuts.
“We believe there will likely be a little more contraction over the next quarter, quarter and a half, but as we enter the second half of the year there will be some improvement. ” he said. “But that won’t necessarily translate into hiring anywhere near 2021 levels.”