A few weeks ago, as they headed off for summer holidays, bankers thought better days for dealmaking must surely be ahead. Wrong.
With the market window for initial public offerings now looking more firmly shut, the banks have embarked on another round of lay-offs, even clipping some highly paid managing directors to cut costs.
"We thought the worst days would be over soon, but now it seems it is far from the end" of staff cutbacks, said a veteran with a European bank. "Maybe I should think about my next employer being a Chinese bank."
Indeed, headhunters said the most aggressive hirers in the marketplace were mainland firms including Citic Securities, China Merchants Securities and Haitong Securities, all of which want to expand in Hong Kong.
Last month, China Merchants grabbed a number of investment bankers from BOC International, promising them wages and bonuses higher than those during the market peak in 2007, a year before the global financial crisis, according to people with knowledge of the terms.
The previous round of quiet, selective lay-offs over the summer hit mostly junior staff in the equities divisions. That pattern has continued and accelerated in the cuts that began last week when Spain's BBVA laid off about 50 employees in Hong Kong. Most of them were equity-related sales people and traders including some in the sophisticated structured-products team.
That was followed this week by Deutsche Bank, which cut about 80 jobs in its Hong Kong and Tokyo offices, mostly sales and trading staff and some equities-related bankers and research analysts.
Both Deutsche Bank and BBVA declined to comment.
Daiwa Securities, which cut about 100 jobs in Hong Kong early this year, also laid off staff in the city several days ago, including several senior executives.
Meanwhile, Nomura, which cut its workforce earlier this year, is expected to announce more lay-offs in Hong Kong soon. Credit Suisse is also expected to follow suit.
Last week, the dim market outlook was underscored by China Everbright Bank's announcement that it would delay its plan to list in Hong Kong.
Bankers took it as a sign that the market window for big initial public share offerings has closed for the year.
Meanwhile, many capital-hungry Chinese enterprises have turned to the debt markets, easing the employment fears of those in the sector.
Additional reporting by Lulu Chen