Goldman Sachs’ decision to cull 30% of its Asian front-office has left investment bankers at other firms worried about their bonuses as well as their jobs.
The scale of the Goldman lay-offs – its regional IB headcount is falling from 300 to just over 200 – plays further into the hands of investment banks in Hong Kong which are already looking to trim 2016 bonuses, say headhunters.
“An MD at a global bank told me this week that now Goldman has cut so many people, his team are more worried about their bonuses,” says a senior headhunter in Hong Kong. “Given what happened at their rival, the bank now has more power to tell them that they’re lucky just to have a job, so their bonus for 2016 is in effect their job.”
Goldman isn’t the only global bank slashing headcount in Hong Kong this year. Several firms, most notably Barclays, have laid off equities staff, and the trimming is now spreading to investment banking. Early this week Bank of America cut about two dozen investment banking roles in Hong Kong, Singapore and Japan.
“In light of these recent redundancies, it’s a bonus if you’re still in work this year. More people are now expecting zero payments,” says Eunice Ng, director of headhunters Avanza Consulting in Hong Kong.
“While a lot depends on individual and bank performance, the overall bonus trend is downward in Hong Kong,” says Ng. “Based on feedback so far from banks and candidates, bonuses could decrease 20% to 30% compared with 2015. People don’t see this year as promising.”
“It’s expected that bonuses will be generally down in global banks in Hong Kong,” adds the senior headhunter. “Global banks are still busy, and people are working hard in lean teams. But the thing that affects bonuses – revenue – is down, mainly because Chinese banks are undercutting the market with their fees.”
The value of announced Asia Pacific ex-Japan M&A deals dropped 17.7% in the first half of this year, while share offerings in the region fell nearly 60%, according to Thomson Reuters data.
Nick Green, managing director at search firm Carraway Group in Hong Kong, adds:”Bonuses have become a much greater indicator of performance and by nature are more meritocratic now.”
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