Western investment banks aren’t the only ones to be trimming headcounts in Asia; and Hong Kong isn’t the only place suffering these retrenchments.
Case in point: China International Capital Corp (CICC), the mainland’s largest investment bank, is reportedly cutting about 30 jobs as earnings decline, according to the Caixin news portal. Although some of these are based in Hong Kong, Beijing positions have also been axed after what the Wall Street Journal describes as a “performance review”.
CICC is expected to have suffered a 40 per cent decline in net profit last year, according to financial data services provider Wind Information.
Recruiters we spoke to in China are not surprised by the CICC redundancies. “It’s done what it had to do. Profits are falling, and the number of IPOs has dropped massively and isn’t expected to bounce back soon,” says one headhunter, who asked not to be named.
Although local securities firms traditionally suffer lower attrition rates than their Western rivals, there is a danger that falling profits and bonus pools will tempt CICC bankers to leave of their own accord. “I spoke to someone last week who choose to resign, and there’s no massive bonus upside at CICC to retain people,” adds the recruiter.
CICC bankers should, however, not feel too hard done by when it comes to compensation. Salary cuts have been reported at smaller mainland brokerages, including CITIC Securities International, CCB International and ICBC International.
The firm’s domestic and foreign rivals in China have also reduced bonuses. “Local securities houses are cutting bonuses, although not as hard as international ones, especially those in Hong Kong,” says the anonymous recruiter.
Stephen He, banking and finance manager, Kelly Services, adds: “Most major investment banks in China, including Morgan Stanley, Merrill Lynch, Citi and Deutsche, have announced sharply reduced 2011 bonus plans to staff in the past few weeks.”