Morgan Stanley lay-offs to hit HK and mainland

Morgan Stanley planned to start cutting about 50 investment banking jobs in Asia-Pacific this week, with at least 80 per cent of the reductions in Hong Kong and on the mainland, people familiar with the matter said.

The planned cuts affected 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 on the mainland were 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 were subject to change, they 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 net revenue from Asia fell by 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 recordlow 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 planned 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.

Share sales by Chinese firms in the United States 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 a year earlier and just 4.3 per cent of the level seen in the 2021 peak, data compiled by Bloomberg showed.

HSBC on Tuesday started a new round of reductions of about a dozen bankers, joining UBS 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.

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 former Credit Suisse banker Kim Sei-won in South Korea.

Min Huang, formerly with the Swiss bank, joined this month to lead its investment management business for China.