Mizuho Securities has been on a hiring spree during the past couple of months in a bid to boost its fixed income capability amid exuberant activity in Asia.
It has hired four salespeople to target China, Singapore and Taiwan, as well as two debt capital markets bankers: Anthony Shum, who left Credit Suisse in March last year, and King Lam, who joins the syndicate desk from Deutsche Bank.
The sales hires include: Fufei Zhang, who will focus on China fixed income; Wee Chun Quah for Singapore; Kelly Fong for Singapore private bank sales; and Sylvia Peng for Taiwan.
Like many firms, Mizuho is scrambling to adjust to the new normal in Asian capital markets: booming bond markets and depressed equities trading.
“Commissions are down 20% for the top 10 in Asia equities, but it’s more like 35% for everyone else,” said Donal Galvin, Mizuho’s head of Asian fixed income in Hong Kong.
Around 10 firms, including Royal Bank of Scotland and Samsung, have quit Asian equities since 2010 and Barclays is now also rumoured to be scaling back.
“More will have to go,” said Galvin. “It’s inevitable for the European banks. This is a tough, very competitive business.”
This is not what was supposed to happen. After a strong recovery during 2010, many brokers figured that expanding into Hong Kong equities was a no-brainer — only for revenues to slump before they even got their snouts into the trough.
It is true that there were some big IPOs in Malaysia, but it is Hong Kong that drives profitability for most of the international firms.
Adding insult to injury, Asian fixed income had a “monster year” in 2012 as the US Federal Reserve hoovered up mortgage-backed paper, leaving many firms over-staffed in equities and under-staffed in debt.
Galvin is now trying to strengthen Mizuho’s fixed-income platform, which he says is a natural strategy for one of the region’s biggest corporate lenders — it has a wholesale balance sheet of $60 billion in the Asian syndicated loan market, putting it fourth behind HSBC, Standard Chartered and DBS.
