The best banks to work for in Hong Kong this year? Not the Americans
Last week, the CEOs of America’s biggest banks told the US House of Representatives that they will pull out of China if Taiwan is attacked, but they may have to take some more immediate if less dramatic action in their Hong Kong investment banking operations.
Investment bank fees earned from mergers and acquisitions advisory and capital markets underwriting in Hong Kong have fallen by 69% this year across as offshore IPOs and debt sales by Chinese companies have dried up.
US banks, which lead the way on listings and M&A, have taken the biggest hit. Morgan Stanley and JPMorgan have seen their fees dropping by 84%, according to figures from Dealogic in the year to date ending September 22, compared with the first nine months of 2021.
Goldman Sachs, which is ranked second by fees on behind China International Capital Corp, has seen revenues fall by 82%. Bank of America’s revenues in Hong Kong have fallen by a similar amount.
There were no figures for Citi as the bank does not rank in the top 10 for fees in Hong Kong this year, according to Dealogic.
European banks have fared slightly better, although they are coming from a lower base because they generate lower revenues than US rivals. Credit Suisse was bottom of the pack among the top ten biggest fee earners, with a 71% drop in IB revenues. HSBC and UBS saw fees fall by 64% and 59% respectively, which is less than the overall fall in fees and suggests they gained market share in a difficult market.
Of this group, so far only Goldman Sachs and Credit Suisse have trimmed headcount in Hong Kong, but one headhunter said: “When you look at how far revenues have fallen, it looks inevitable that they will cut these businesses before year-end.”
There is an alternative narrative to job cuts. Bank bosses are reluctant to push ahead with layoffs because they don’t want to be caught out if the cycle turns. Meanwhile, one division head at a North American firm told eFinancialCareers that when it comes to thinking about headcount, they are discounting comparisons with 2021. “2021 was an outlier and the peak of the cycle globally. So when we think about costs, we’re looking at 2019 as a better comparison.”
However, even through this lens the picture looks bleak in Hong Kong, where fees were $2.1bn after the first nine months of 2019, compared with $884m in the year to September 22 this year, and $2.85bn in the first nine months of 2021.
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