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Morning Coffee: IBD layoffs to come at CIMB? How princeling banker avoided JPM’s axe

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Investment banking jobs at CIMB in Singapore and Hong Kong could be cut as the Malaysian bank looks to speed up cost reductions after the collapse of an $18bn three-way merger plan with smaller local rivals. The bank’s ongoing review of its operations now includes plans to reduce costs by 30% in its expensive investment banking division. CIMB has not confirmed that these cuts will lead to layoffs, but people with knowledge of the review said jobs losses were possible in IBD and equities, reports the Wall Street Journal.

If the axe does swing, many of the redundancies are likely to be outside of Malaysia. Hong Kong and Singapore have been among CIMB’s main IBD offices since it bought the Asian cash equities, equity capital markets and corporate-finance operations of RBS three years ago. If CIMB employees in Hong Kong lose their jobs, they won’t be the only ones looking for work – around 100 Standard Chartered staff were made redundant in Hong Kong last month as the British bank shut its equities division. Recruiters told us at the time that other banks in Hong Kong wouldn’t have enough vacancies to take on the new talent flooding the labour market.

For more secure jobs at CIMB, try consumer banking. The bank is now pivoting its business strategy towards the division in a drive to make it contribute 60% of its income (up from 44% currently). However, don’t expect a rush of new consumer-banking vacancies in Singapore and Hong Kong. “Hiring will probably mainly be in Malaysia. Hiring in large numbers in Singapore is becoming more expensive for Malaysian banks because the ringgit has fallen against the Singapore dollar,” says a recruiter in Singapore who asked not to be named because of client confidentiality.

Separately, ongoing US investigations have further revealed the lengths to which Western banks would go to recruit princelings, the children of senior Chinese politicians. Now J.P Morgan is under federal scrutiny over the 2007 hiring and subsequent tenure of Gao Jue, the son of Gao Hucheng, China’s current commerce minister. Gao junior performed poorly in his job interview, recruiters within the bank questioned his qualifications and a senior banker described him as “immature, irresponsible and unreliable”. But his job application was allegedly supported by William Daley, a senior J.P. Morgan executive at the time, reports the Wall Street Journal. The firm also spared him from the axe amid a round of redundancies in 2008, allegedly because his father said he would “go extra miles” for the bank if it retained his son, according to an email quoted by the WSJ.

While the Gao case is an unwelcome reminder of past hiring practices, headhunters in China say that Western banks are no longer hiring underqualified junior bankers Share on twitter purely because their parents might help win them business from state-owned Chinese companies. Instead foreign banks in China are now increasingly trying to hire bankers who can assist the global expansion of private Chinese companies. They are demanding “real banking skills and experience” instead of political connections, Jason Tan, a partner at search firm Being & Associates, told us in November. “Chinese conglomerates are going on an international shopping spree. To help these new clients, banks like JPM must employ Chinese bankers who know developed countries and their prime assets,” he said. Brian Gu, co-head of China investment banking at JPMorgan, told Finance Asia last year that: “The new breed of bankers has to learn different product and industry skills.”

Meanwhile:

DBS names veteran banker as the new head of its expanding Indonesian business. (Straits Times)

Offshore yuan bond issues are set to fall this year for the first time since the Hong Kong market began in 2007 as funding costs rise. (South China Morning Post)

Big Four China audit firms settle with SEC over document dispute. (Reuters)

Great Eastern posts 25% jump in Q4 earnings. (Channel News Asia)

War of words between local and mainland students at University of Hong Kong. (Reuters)


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