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CICC, Citic, JPMorgan cut investment banking jobs in China as deals stall

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7 months ago

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CICC, Citic, JPMorgan cut investment banking jobs in China as deals stall

A man rides a bicycle past a Citic Securities Co. branch in Shanghai, China.

Qilai Shen | Bloomberg | Getty Images

Two Chinese companies and JPMorgan have become the latest banking groups to cut jobs in China as a slow recovery in listing and dealmaking activities force them to ramp up cost controls, six sources with knowledge of the matter said.

Beijing-based China International Capital Corp (CICC) is planning to reduce its investment banking headcount by at least 10% this year, two people with knowledge of the matter told Reuters.

Peer CITIC Securities is cutting around a dozen investment banking jobs in Hong Kong, according to two other sources.

The cuts would be the first major workforce reductions this year at top Chinese investment banks, and would rank among Chinese banks’ biggest layoffs since the end of the COVID pandemic, as the country’s economic slowdown, rising Sino-U.S. tensions and sluggish capital markets have dampened dealmaking.

JPMorgan Chase & Co, meanwhile, laid off at least six bankers in Hong Kong this week, the latest Wall Street bank to reduce its workforce there, another two sources with knowledge of the matter said.

All of the sources declined to be named as they were not authorized to speak to the media.

CICC and JPMorgan declined to comment on the job cuts. Citic Securities’ offshore platform CLSA did not immediately respond to Reuters query.

Chinese banks were previously backed by a strong pipeline of domestic listings and smaller deals but now face collapsing deal volume as onshore listings stall with uncertainty in the recovery of offshore markets of Hong Kong.

Shrinking valuations

Wall Street and European banks moved through 2023 to trim their investment banking workforces in the Asia Pacific region, with Chinese companies bucking the trend, resorting to job relocation and pay cuts instead of direct layoffs.

Early in 2024, Bank of America, Morgan Stanley and HSBC cut dozens of investment banking jobs in Asia Pacific.

The cuts were made as total proceeds raised via initial public offerings (IPOs) on mainland China plunged nearly 90% to $2.6 billion for the first four months of the year, the lowest since 2013, according to LSEG data.

The top offshore listing destinations for Chinese companies – Hong Kong and the United States – are facing slower dealmaking and shrinking valuations.

Hong Kong’s stock exchange saw 12 IPOs raise HK$4.7 billion ($600.3 million) in the first quarter, a drop of 30% year-on-year and the worst since 2009, according to data from Deloitte.

After a $5 trillion fall, Chinese equities are witnessing some green shoots, with Hong Kong’s benchmark Hang Seng Index (.HIS) up 20% from its most recent low in January and gaining momentum.

But uncertainty about the recovery is still casting a shadow over once highly-paid investment bankers, with a majority of the dealmakers based in Hong Kong.

Bankers and recruiters have said they anticipated staff cuts that began in late 2023 on the Chinese mainland and Hong Kong, key regional investment banking hubs for Western banks, would accelerate this year.

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