Financial sector hiring in Hong Kong worst since 2008 crisis as banks and brokers tighten purse strings
Brokerage firms rather than other banks in Hong Kong are freezing recruitment and salary hikes like HSBC, with headhunters saying the current level of hiring is the worst since the 2008 global financial crisis.
Christopher Cheung Wah-fung, legislator for the financial services sector, said many of the 500 local brokerage firms have cut down their headcount since the stocks rout last summer that wiped off US$4 million market capitalisation in China and the Hang Seng Index continues to languish 30 per cent off its peak last April.
“The brokerage sector has already laid off poor performers and hasn’t been hiring in the last six months. Now it’s the turn of the banking sector,” Cheung said.
“It is highly likely that many brokerage staff won’t see any pay hikes this year as the stock markets in both Hong Kong and China have had a bad start in January. They would need to face the reality that the companies have no choice but to tighten the purse strings. This is going to be a tough year.”
Jerry Chang, a director of headhunters Barons and Company, said both commercial banks and investment banks are hiring less.
“The current situation is the worst since 2008 as banks are not adding to existing headcount. Many banks are firing poor performers and replacing them,” Chang said. “It’s only to be expected given the state of the economy and the stock market.”
The Hong Kong Monetary Authority has said local lenders on average saw a profit decline of 2.8 per cent last year, the worst since 2008, due to a drop in new loans and increase in bad debt.
HSBC, the largest bank in Europe and Hong Kong, on Friday told its staff in an internal memo that the bank’s worldwide freeze on hiring and pay hike would be in place this year as part of its efforts to cut up to US$5 billion in costs by the end of 2017.
HSBC deputy chairman and chief executive of Asia-Pacific, Peter Wong, however, said on Monday that the bank would continue to hire in Hong Kong and the Pearl River Delta to keep pace with the emerging opportunities in mainland China.
One banker, who did not want to be identified, said many banks would not want to let go of too many people in one go. “The banks know if they do that, they will attract media attention. They are more likely to quietly lay off in batches,” he said.
Officially, banks maintain that they have no plans to cut headcount.
A Standard Chartered Bank spokeswoman said the bank would continue to invest in people and determine pay according to the prevailing economic condition and individual staff performance.
“We will continue to invest in people to ensure we have the right level of capacity to deliver our ambition and growth plan; and we are keeping track of market movements to ensure we stay competitive,” she said in response to a enquiry from the South China Morning Post on Tuesday.
She also said Standard Chartered Bank “will assess staff salary payment based on various factors, such as economic and business outlook, financial situation and performance of individual staff”.
A spokeswoman for DBS Bank (Hong Kong) said the lender would determine its employees’ remuneration “based on their job performance”.
Bank of China (Hong Kong) said it will continue to recruit in view of the ongoing business development. “There is a huge growth potential in Hong Kong’s finance industry. That brings opportunities especially from RMB and cross-border businesses,” said the bank in a statement.
It added that it sees its staff as an asset. Salary hike, it said, would be subject to various factors such as external business environment, market conditions and the group’s business performance.
Additional reporting by Peggy Sito