Morgan Stanley, HSBC cutting dozens of Asia investment banking jobs as deals slump

HONG KONG: Morgan Stanley and HSBC are cutting dozens of investment banking jobs in the Asia Pacific this week, sources with knowledge of the matter said, as weaker deal activities and sluggish markets in China and Hong Kong weigh on their business prospects.

Morgan Stanley is cutting at least 50 investment banking jobs in the region starting this week, three sources with knowledge of the matter said, affecting around 13 per cent of the Wall Street bank’s Asia investment banking workforce of 400.

Layoffs at the investment banking business unit of HSBC, which makes the bulk of its revenues and profits in Asia, started on Tuesday (Apr 16) and is expected to see the departure of around 30 dealmakers in the region this week, three separate sources said.

All of the sources declined to be named as they were not authorised to speak to media.

Morgan Stanley declined to comment on the job cuts. HSBC did not immediately respond to a Reuters query on Wednesday.

CNA has contacted both banks for more information.

The cuts are among the largest to the two banks’ China-focused investment banking teams and follow similar measures by other banks stung by a decline in deal-making activities in China amid a slowing economy.

A new round of staff cuts that began in late 2023 in the Chinese mainland and Hong Kong, key regional investment banking hubs of Western banks, is set to gather pace this year, bankers and recruiters have said.

The top listing destinations for Chinese companies are facing a drought in dealmaking and shrinking valuations. Hong Kong’s stock exchange saw 12 initial public offerings (IPO) raise HK$4.7 billion (US$600.28 million) in the first quarter, a drop of 30 per cent year on year and the worst since 2009, according to data from Deloitte.

Money raised via China IPOs also plunged 82 per cent from a year earlier to just US$2.4 billion during the same period, the smallest quarterly fundraising since the fourth quarter of 2018, and down 82 per cent from a year earlier, preliminary LSEG data showed.

The total value of merger and acquisition deals with China involvement shrank by 36 per cent, according to LSEG data, pointing to smaller fees bankers earned from clients.

In January, Bank of America laid off around 20 bankers in the region, following a flurry of investment bank downsizing by UBS, Citigroup and other boutique firms.