Deutsche cuts

Deutsche Bank cuts 40 equities bankers in Asia

Deutsche's cuts are part of a street-wide reduction in equities team staffing in Asia, which is a reflection of how the capital markets have slowed.

Deutsche Bank cut approximately 40 bankers in its equities division in Asia yesterday, which is about 9% of its equities staff, according to sources. This was part of Deutsche’s plan to reduce 1,900 people from its global staff, which it announced on July 31.

“This says a lot more about the industry than a specific bank,” said a source, who pointed out that rival banks are all facing the same problem. The capital markets have slowed and something has to give — so while cuts have been across the board, they’re most notable in equity capital markets and equity trading.

Consider that global $1 billion-plus initial public offerings stand at $25.5 billion this year from just six deals, compared to $47.5 billion dollars from 17 deals in 2011, according to Dealogic. That marks the lowest year-to-date level and activity since 2009.

Goldman Sachs has been slimming down in Asia through attrition and gradual cuts this year — but this is on top of deeper cuts of about 3,000 of its global staff last year. It has increased its cost-saving target by $500 million.

Credit Suisse announced last year that it planned to cut 7% of staff (which at the time was 50,700 globally) — and word on the street is that this has been occurring across the Swiss firm’s Asia equities workforce during the past week. Its Swiss rival UBS announced last year that it will eliminate 3,500 jobs during the next two-and-a-half years as part of the bank’s cost-cutting efforts worldwide.

In January, Citi said it would shed 5,000 jobs globally across all businesses during the course of the year, while Morgan Stanley said in July it expects its payroll to decline by about another 1,000 workers globally this year to meet a broader target of reducing staff levels by 7% from the 61,899 employees it had at the end of 2011. And Bank of America Merrill Lynch said in 2011 it planned to cut about 30,000 jobs globally during the next few years.

Sources say several banks plan to make cuts in the next week — that may well be a part of these earlier announced cost-saving plans. That has bankers speculating that roughly15% of the total workforce in equities in Asia will be made redundant by the end of the year.

Indeed, Russia’s Renaissance Capital, an investment bank specialising in emerging markets and the natural resources sector, recently closed its Hong Kong and Beijing offices, and CLSA cut more than 20 people last month. In February, Samsung Securities shut down almost all of its operations outside Korea.

Deutsche made specific changes to its equity derivatives business. Derivatives remain a core business for its global and regional clients, but the bank combined its flow and exotics trading team into one unit. “This will allow us to cover clients smoothly across their vanilla and structured needs, and streamline risk management and operational processes,” said a source, adding that the German bank will also focus on equity business areas where it has a technology advantage and is able to add value.

While a Deutsche spokesman declined to comment on who was cut, he said: “The adjustments were part of the global programme announced on July 31 and there is no change in our full-service equity offering across primary and secondary to our clients across the region.”

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