Japanese financial firms racked up subprime losses of about US$8bn as of the end of March, according to a recent Financial Services Agency report , but the locals still aren’t axing jobs like the bulge bracket.
While international players such as Merrill Lynch, Morgan Stanley and UBS are on a post credit crunch culling spree in Japan, Standard & Poor’s says it has “no new causes for concern” over Japanese investments in securities linked to US subprime mortgages.
Of the local banks, Mizuho Financial Group has been hardest hit, losing US$6.1bn on subprime, but Tokyo’s recruiters remain largely upbeat on domestic hiring.
Bruce Lepore from Talent2 hasn’t seen anything to suggest that Japanese banks are freezing hiring or laying off staff, although recruitment rates aren’t on the increase either.
James Incles, managing director of Morgan McKinley’s Tokyo office, adds: “Japan’s financial services industry has been somewhat sheltered from the fallout of the credit crunch, and hiring within the sector remains relatively steady.”
One Japanese recruiter, who asked not to be named, agrees Japanese banks have been relatively unscathed, but says he still expects redundancies in certain products. “The damage they have received is really small compared to say Lehmans or Barclays, but desks will be shrinking,” he says. “Unlike foreign banks, Japanese banks have to maintain a certain line-up of products, so they won’t be cutting products, but I’m sure there will be some shrinkage, especially in the credit area.”
The recruiter believes Japanese banks may want to cherry pick surplus staff from struggling i-banks. But will bulge-bracket bankers want to go Japanese? The answer is probably not, according to Lepore. “The cultural gap between domestic and foreign banks, and the lower compensation bands, will make it very difficult for Japanese banks to hire talent from foreign banks,” he says.