Morgan Stanley downsizing: Hong Kong, China to bear the brunt of US bank’s Asia-Pacific job cuts
- More than 40 of the 50 investment-banking jobs in the Asia-Pacific the Wall Street firm plans to cut will be from Hong Kong and mainland China, sources say
- Morgan Stanley joins HSBC Holdings, which on Tuesday laid off about a dozen bankers, after UBS Group and Bank of America cut jobs earlier this year
The planned cuts affect about 13 per cent of the 400 bankers in the region, excluding Japan, one of the people said. More than 40 people in Hong Kong and mainland China are expected to lose their jobs in the coming round, the people said, asking not to be identified discussing private information.
The final size and timing of the cuts are subject to change, the people said. A media representative for the New York-based bank declined to comment.
The job cuts would be the deepest in years for Morgan Stanley in China, its biggest market in the region. The world’s second-biggest economy is struggling to find a firm footing because of a prolonged property crisis and persistent doubts over growth. Morgan Stanley reported on Tuesday that net revenue from Asia fell 12 per cent to US$1.74 billion in the first quarter from a year earlier, even as its global results topped forecasts.
The firm delayed the lay-offs late last year, betting that historically low bonuses for deal makers would spark voluntary departures, one of the people said. Only a few bankers left, prompting the company to make deeper cuts as revenue from China continues to slide. The bank plans to start communicating with the affected employees this week, the people said.
Global financial firms are seeking to reduce expenses amid a deal drought, and have been cutting investment-banking staff in Asia amid deteriorating US-China relations, along with a crackdown on private enterprise and a property crisis.
Stock sales by Chinese firms in the US and Hong Kong plummeted to a two-decade low of US$1.7 billion in the first quarter, about 30 per cent of the volume in the same period last year, and just 4.3 per cent of the level seen in the 2021 peak, data compiled by Bloomberg shows.
HSBC Holdings on Tuesday started a new round of reductions of about a dozen bankers, joining UBS Group and Bank of America, which cut jobs earlier this year. Goldman Sachs, Citigroup and JPMorgan Chase have made unprecedented rounds of job cuts in the past two years in Asia.
Hong Kong bankers on ‘survival mode’ as IPO drought ends windfalls
Pay for most senior investment bankers at Wall Street firms in Asia dropped to the lowest level in almost two decades last year, with total compensation for many dipping below the US$1 million or more they typically earn. At least 20 per cent of managing directors at banks, including Morgan Stanley and UBS, received no bonuses, Bloomberg reported in January.
Morgan Stanley last year reduced its investment-banking headcount in the region by about 7 per cent, with China-focused bankers taking the biggest hit, following major cuts in 2022.
Still, Morgan Stanley is gradually building its onshore China business. It won approval for principal trading and research licences last month, after obtaining the go-ahead to set up a futures company and taking full ownership of its fund management business last year.
The bank also made some senior hires for its investment-banking division this year, including Michael Ginzburg from Goldman Sachs in Australia, and ex-Credit Suisse banker Seiwon Kim in Korea. Min Huang, formerly with the Swiss bank, joined this month to lead its investment management business for Greater China.
