In less frugal times other banks would be competing to hire the MDs that Merrill Lynch is reportedly making redundant in Asia, but rivals of the US firm are equally cost conscious and in no rush to recruit.
In a process which started on Monday, some 15 of 75 Asia investment banking MDs are being laid off by the end of Q1, according to Reuters, including veteran Michael Cho, co-head of mergers and acquisitions in Asia ex-Japan, Australia and India.
Cho’s departure is one of the most significant in Asian investment banking since the latest round of reductions began in the fourth quarter of last year. It shows that firms are not afraid to lose the skills of senior staff who prove too expensive in the current uncertain global economic climate. Culling highly-paid MDs is also one of the fastest ways to reduce costs.
A Hong Kong recruiter, who asked not to be named, says BoA Merrill Lynch was motivated by a lack of revenue “just like what we have seen with others, HSBC etc”.
Eunice Ng, director, Pacific, Avanza Consulting, adds: “There is anticipation of slow activity in the investment banking sector across Greater China and Asia, and MDs are obviously expensive and can be replaced by other experienced executive directors.”
But will rival firms be quick to hire the dislodged bankers? “No, because most still have hiring freezes in place and are still monitoring markets in general,” says Jens Soderlund, managing partner, Sirius Partners.
Ng says banks are cautious about their hiring and won’t be able to take on all of the former MDs. Working on a consultancy basis is an option, however.
Soderlund recommends that some of them shift away from investment banking. “The few lucky senior equity transactors will need to change their careers – for example, moving over to wealth advisory – if they want to continue within banking.”