Deutsche Bank’s announcement yesterday that it will slash 1,900 positions outside of Germany may mean that Asian jobs are vulnerable.
The lay-offs, which will largely affect those in corporate and investment banking, come after Q2 net profits at the bank nose-dived by 46 per cent.
The impact of the announcements in Asia isn’t clear yet, but sources say the region’s bankers are unlikely to escape unscathed.
Headhunter Nick Poole was informed by an industry insider that lay-offs will probably affect broad areas of investment banking – including both the front and back office. “The bank’s position is stronger in Asia generally, but like most of the larger firms, some staff are under greater pressure to justify their positions as revenues become more constrained.”
Who’s more susceptible to lay-offs?
Deutsche’s Singapore employees could potentially be more at risk than their peers in Hong Kong, chiefly because the Republic is where the firm’s Asia Pacific head office is based.
Pan Zaixian, general manager, Kerry Consulting, says: “There’s a sizeable headcount and operational presence in Singapore, so perhaps it is hard not to be visible. It is also not unusual for banks in general to “build-and-move’’ their set-up from one already established centre here in Singapore to another lower-cost service region, say in Philippines or India. Hong Kong, on the other hand, has certain strategic business advantages over Singapore, for instance there’s access to China and is a larger capital market.”
In the meantime, this latest move in the string of redundancy announcements isn’t likely to make many employees leave of their own accord unless pushed. “Asian banks may be perceived to be a safer bet than those who have their decision-makers based elsewhere. Candidates may be on the lookout due to internal structural concerns, but the inertia against moving is also very high as there is also a real fear of moving from one unsettled organisation into another,” adds Pan.
It’s not all about the money
Retrenchments in the region aren’t necessarily all about the bottom line. Pan says: “Institutions can get boardroom and external political pressure to focus on their home markets. Apart from commercial reasons, there could be top down pressures from head office to look at foreign markets to rationalise their headcount, even if they are covering cost or are profitable”
On a related note, Deutsche will also shrink pay to placate shareholders. On the need for salary reform, the bank’s co-CEO Anshu Jain has said bluntly: “Let me be clear: we will stay committed to attracting and retaining the best talent…but we firmly believe that the industry as a whole will have to change its compensation model. We are absolutely committed to being at the forefront of that change.”