SG
If you are heaving a sigh a relief that you have managed to hold onto your job as we enter the Year of the Dragon, here is some rather inauspicious news: investment banks in Asia are not quite done with their cutting.
Simon Roberts, managing director, Sheffield Haworth, says: “I don’t think the bulk of redundancies have already been made. If markets become volatile again, further cost savings will have to be made and firms will need to look at headcount again. Currently the cost models that banks are running are just not sustainable given the level of deal activity in this market.”
Likewise, Farida Charania, chief executive officer, banking and financial services, Nastrac, foresees a possible round of layoffs after bonuses are paid. Although there are plenty of active candidates, firms are not looking to hire aggressively, says Roberts. The financial industry is undergoing what he calls a “seismic change”. “A lot of people are on the streets already and some may not ever get a job in banking again.”
Rubbing salt into candidates’ wounds
Some retrenched workers may even get the boot without any dough to soften the blow. “Up until now most firms offer severance when they lay off people, but I think going forward – given the current level of base salaries in the banking community – making people redundant will continue to be very expensive. We may see some firms seeking to let people go due to performance-related issues as this may well prove cheaper than redundancy,” says Roberts.
Charania knows of a recent case in which a VP from a foreign bank was dismissed in this manner after three years of service. However, she says this could be the exception rather than the rule – she’s only seen one example so far.
The i-banking outlook
Investment banking hiring in 2012 is looking relatively flat. Roberts says: “Visibility is difficult at present and while most firms have a strong IPO pipeline, the ability to deliver on that is wholly dependent upon markets maintaining their New Year bounce.”
He anticipates sell-side equities and fixed-income hiring to remain fairly subdued, however, M&A should stay robust in the medium term, and aggressive cuts in this sector are not expected. Charania thinks more roles will open up in operations rather than in the front office.
“All in all, it will be a difficult year. So much depends on sentiment at the end of the day: the euro sovereign debt crisis, the US presidential election and whether or not China will have a soft landing,” says Roberts.
That all seems unduly negative though there are some tidy quotes about people on the streets who might never work in a bank again and noting that there may be no payoff in the event of retrenchment from a sample of one. I understand times are quite tough and mayhap the low hanging fruit has gone but Asia has embedded ‘bouncebackability’ and has seen off crisis after crisis over the last 15 years and emerged stronger for them. The Public and Private Sector in North and South East Asia will continue to make significant and neccessary investments in infrastructure to serve the growing educated and middle classes who will need and desire schools, hospitals, roads, bridges, houses, cars, food, heating and aircon and as a side effect this will keep the regional economy moving until the rest of us get on board. The market will change and so will hiring trends within financial services but its hardly unprecendented. There will always be significant pockets of opportunity for individuals, corporations and banks and Asia remains the place to be. Stay positive and given some time part of the caution and fear will evaporate and the excitement and positivity will return.