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Macquarie cutting Asia banking jobs as deals fizzle

Tuesday, March 31, 2015 - 08:54
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The reductions follow a drop in revenue from the advisory and capital markets division amid a slump in deals. They also reflect Chief Executive Officer Nicholas Moore's strategy of shifting the company toward more stable businesses such as leasing, fund management and lending to rely less on trading and advisory.

[SYDNEY] Macquarie Group plans to cut about half of its investment-banking jobs in Asia and announce the departure of the head of its advisory and capital markets unit as soon as Tuesday, people familiar with the matter said.

About 80 to 90 jobs would be eliminated in the reductions, one of the people said, asking not to be identified because the decisions are confidential. Jeremy Wernert, who was named head of Macquarie Capital, the group's investment-banking unit, less than a year ago, is leaving, the people said.

Fiona McDonald, a Hong Kong-based spokeswoman at the bank, didn't reply to e-mails or calls seeking comment. Mr Wernert, who previously led Asia equity-capital markets, didn't return calls to his mobile phone seeking comment.

The reductions follow a drop in revenue from the advisory and capital markets division amid a slump in deals. They also reflect Chief Executive Officer Nicholas Moore's strategy of shifting the company toward more stable businesses such as leasing, fund management and lending to rely less on trading and advisory.

"Asian investment banking is very competitive and Macquarie's move may be reflective of its general strategy," TS Lim, a Sydney-based analyst at Bell Potter Securities, said. "It's about reducing headcount in Asia and concentrating on successful markets such as Australia and North America. Also it goes with the trend of investing in non- cyclical businesses."

Macquarie's Asian retreat follows that of global competitors including Goldman Sachs Group and Standard Chartered. Standard Chartered said in January that it was shutting its unprofitable institutional equities business globally, eliminating 200 jobs, mostly in Asia. Goldman Sachs is reducing the size of its investment-banking team in Singapore by about 30 per cent compared with the start of the year.

Citigroup Inc, CIMB Group Holdings, Nomura Holdings have also cut jobs in Asia this year as tougher regulations and higher capital requirements put pressure on financial firms globally.

The Macquarie cuts will be described to employees on Tuesday and occur across Hong Kong, Singapore, Korea, India and Japan while excluding Australia, one of the people said. Some affected staff in Japan have been told since the end of last week to leave, the person said.

The bank has been trying to boost its principal investments business, where activities include providing capital to clients making acquisitions and investing in companies preparing to go public. Former Asia CEO Alex Harvey was named global head of principal investments in May.

Macquarie is expected to report net income of A$1.49 billion (US$1.1 billion) in the year to March 31, according to the mean estimate of 10 analysts surveyed by Bloomberg. That would be its highest profit since the record A$1.8 billion it posted in March 2008, according to regulatory filings.

Asia is Macquarie's smallest region and contributed revenue of A$419 million, or 10 per cent of the six-month total through Sept 30, filings show.

The profit contribution of its investment banking unit dropped to A$280 million in the year to March 2014 from A$2.92 billion in 2008, data compiled by Bloomberg show. The non- cyclical businesses of asset management, lending and leasing have increased profit to A$2.14 billion from A$415 million in the same period, the data show.

BLOOMBERG

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