Investment banks, asset managers shedding jobs

Singapore

INVESTMENT banks and asset managers are trimming their headcount as bottom lines get battered by the US-China trade war, rising US interest rates and slowing economic growth.

Société Générale SA is the latest to fall victim to the industry's increasingly challenging environment. France's third largest bank plans to cut about 1,600 jobs globally after failing to meet financial targets in the fourth quarter. The investment bank will be hardest-hit, losing about 1,200 positions, with 750 of the reductions to take place in France and the rest from its London and New York branches.

According to the Financial Times, Soc-Gen will close its commodities business and proprietary trading unit and reorganise its fixed-income division to boost profits, particularly the underperforming rates, credit, currencies and prime services operations, as was first flagged in February. The international retail unit is also being overhauled.

Soc-Gen, which has been in Singapore since 1979, did not reply to queries from The Business Times on how the Singapore operations will be affected by the cuts - which represent about 8 per cent of the investment bank's 20,000-strong workforce - expected to be completed by the third quarter.

Soc-Gen's troubles are not unique. In February, rival BNP Paribas said "extreme market conditions" hit trading revenues in the fourth quarter and announced its own 600 million euro (S$915 million) cost-cutting programme.

UBS Group chief executive officer Sergio Ermotti has also guided that income from its investment bank will decline by about a third in the first quarter from the year-earlier period.

In the UK, HSBC is also said to be preparing to lay off dozens of staff in its global banking and markets business, which houses the British bank's trading and investment banking operations.

In Germany, Deutsche Bank could cut up to 15 per cent of its investment bank staff to achieve the cost savings needed to make a proposed merger with local rival Commerzbank worthwhile, analysts calculated.

Over at JP Morgan Chase & Co, about a hundred staff in its asset and wealth-management division have been told to go in late March after a periodic review of staffing. The US bank employed nearly 24,000 people in its asset and wealth management at the end of last year.

BT understands that Credit Suisse, Switzerland's second-biggest bank which last year completed a painful three-year restructuring as it refocused on wealth management and scaled back on its investment banking, is unlikely to see further headcount or cost cuts globally.

In Asia, Japan's Nomura is said to be lopping 150 frontline roles across the Americas and Europe, the Middle East and Africa on top of reductions in Hong Kong and Singapore, according to sources, as it cuts US$1 billion in costs from its global trading and investment banking operations.

Nomura is said to have axed eight of its nine staff from its Singapore equities research team. Most of Nomura's cost cuts in its wholesale business will be completed by March 2020. It also plans to eliminate at least 30 of its 156 retail brokerage branches dotted across Japan. Nomura declined comment.

In Hong Kong, Value Partners Group too had pared "a small number" of staff in January after net profits plunged nearly 90 per cent last year to HK$229.5 million (S$40 million).

Closer to home, Singapore-based Eastspring Investments - the Asian investment management arm of UK insurer Prudential plc with almost US$200 billion of assets under management - is also laying off staff after a challenging 2018.

"Overall, the market in 2018 was challenging. Across the board, asset management firms are facing rising costs and lower fee revenue. We have been reviewing all areas of our business to determine which initiatives and activities should be prioritised in the current operating environment," an Eastspring spokeswoman said.

"As we have embarked on an upgrade of our systems and processes, it's natural that our workforce would evolve to meet the future needs of our organisation," she added, declining to give a specific number on those affected.

Eastspring's new CEO, Wai-Kwong Seck, is due to come onboard on April 15, replacing Guy Strapp, who has decided to retire after 12 years with the company.

According to the spokeswoman, Asia was a key contributor to the Prudential Group's recently announced 2018 result. "We will continue to invest in high-priority initiatives that we believe will drive growth and allow us to capitalise on opportunities, whilst looking at ways to reduce costs and increase efficiency,'' she said.