Morgan Stanley planning major round of layoffs in China

The planned cuts affect about 13% of the firm's 400 bankers in the Asia Pacific region, excluding Japan

The job cuts would be the deepest in years for Morgan Stanley in China, its biggest market in the region. Reuters
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Morgan Stanley plans to start cutting about 50 investment-banking jobs in the Asia-Pacific region this week, with at least 80 per cent of the reductions expected in Hong Kong and China.

The planned cuts are expected to affect about 13 per cent of the 400 bankers in the region, excluding Japan.

More than 40 people in Hong Kong and mainland China are forecast to lose their jobs in the coming round, sources close to the matter said.

The scale times of the cuts may change. 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 establish a firm footing due to a prolonged real estate crisis and persistent doubts over growth.

Morgan Stanley reported on Tuesday that net revenue from Asia fell 12 per cent to $1.74 billion in the first quarter from a year earlier, even as its global results topped forecasts.

The firm delayed the layoffs late last year, backing that historically low bonuses for dealmakers would spark voluntary departures.

However, the company continued to make deeper cuts as revenue from China declined. The bank plans to start communicating with the affected employees this week.

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 fell to a two-decade low of $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 fresh round of reductions of about a dozen bankers, joining UBS Group and Bank of America, which cut jobs earlier this year.

Goldman Sachs Group, Citigroup and JP Morgan Chase have made unprecedented rounds of job cuts in the past two years in Asia.

Pay for most senior investment bankers at Wall Street firms in Asia dropped to the lowest level in about two decades last year, with total compensation for many dipping below the $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 licenses last month, after obtaining the go-ahead to set up a futures company and take 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.

Updated: April 17, 2024, 4:30 AM