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Goldman precedent hints at further cuts and zero bonuses in Hong Kong

Goldman Sachs has led the charge in cutting jobs in Hong Kong, but rivals are expected to follow suit in the coming weeks. 

“Every corporate finance head I speak to says they’ll be trimming headcount in the coming weeks,” says one headhunter, who would not specify which banks will cut.

But eFinancialCareers understands that Goldman’s big US rivals will start to make cuts.  They are not expected to be on the same scale as Goldman which cut 30 jobs last month. “Goldman has to cut because it hire much more aggressively than the rest,” said the headhunter.

The areas that Goldman cut last month are instructive – one third of the people who left covered China equity capital markets, which has been the worst hit areas of corporate finance this year.

So far, banks have controlled headcount by not replacing anyone who has left, but that presents a problem. “It means you can’t control the quality of who’s leaving,” the headhunter added.

Banks have frozen hiring in Hong Kong and another headhunter descried the recruitment market as ‘dead’, adding: “We don’t see any hiring until next year now.”

With global investment banking fees falling by 40% in the first nine months of the year, according to Dealogic, it’s only a matter of time before US banks press ahead with cuts to their APAC operations as part of a bigger cost-cutting exercise.  But no-one is expecting a bloodbath in Hong Kong and one banker at a western firm said they are likely to adjust headcount by slashing bonuses to zero. “That way we don’t have to pay them out to fire them,” the banker said.  

Following a 66% drop in corporate finance fees in Hong Kong compared with the first nine months of 2021, banks are cutting in other areas as well as ECM.  Nomura has made cuts in investment banking, with Jonathan Yip, head of DCM for Asia Ex-Japan and Jeffrey Chan, a managing director in real estate among a handful of bankers to have been made redundant.  

Photo by Daniam Chou on Unsplash

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